CHAPTER ONE

BACKGROUND OF THE STUDY AND THE FRAMEWORK FOR

ANALYSIS
Introduction
This study is about decentralisation and corruption in the Autonomous Province of
Nanggrou Aceh Darussalam (NAD)

in Indonesia.
1
It investigates the relationship
beteen decentralisation and the incidence of corruption in the region of Aceh. It
analyses specifically the nature of decentralisation and its implication on the incidence
of corruption in Aceh. The central government has been ac!noledging the province
of Aceh as a semi"autonomous province since 1#$#. The provincial administration
as delegated a limited authority pertaining to education% custom and religious
matters. After the reformasi% provincial governments have received a better political
deal from the central government. &y the virtue of the 'a No. 1()*++1 ,la on
governing of Aceh% apart from being granted a distinguished recognition for its special
characters% namely- the implementation of Islamic Syariah (Islamic la)% the
establishment of a Syariah court% and the establishment of the Wali Nanggroe
(guardian of the state)% hich e.plicitly reflects the prominence of the Islamic
traditions of Aceh% the region also as granted a greater political authority and a larger
share of its natural resources. The la had empoered the respective local DP/
(Dewan Perwakilan Rakyat/ People0s 1onsultative Assembly) of Aceh to formulate
Qanun or local regulations ith consultation ith local chief e.ecutives to assure the
smooth implementation of local development% as ell as granted Aceh% its due right%
1
In this study the terms NAD and Aceh are used interchangeably% and the term 2decentralisation3 in
Indonesia is defined as 2autonomy3 and they have been used interchangeably. 4ith reference to Aceh%
it has been !non as special broad autonomy.
1
for the first time in $+ years to retain 5+6 of the revenue generated from its natural
resources% and other additional resource allocations from the central government.
*

Aceh has been among the main beneficiaries of decentrali7ation. After the
inauguration of special autonomy status in *++1 Aceh e.perienced a sharp increase of
fiscal revenues that ere derived from natural resources from a figure of /p. *8
billion (9*.5 million) in 1### (or 1.: percent of total revenue) to /p. : trillion (9:*1
million) in *++: (:+ percent). There ere also huge reconstruction funds for tsunami
recovery hich by ;une stood at *++8% <=9:.# billion orth of on going
reconstruction pro>ects against total fiscal pledges of <=9( billion. It is managing 8
times the resources it had in 1###. &ased on the ne 'o?A ('a on ?overning of
Aceh)% Aceh ill receive an additional * percent of the DA< (Dana Alokasi Umum)
?eneral Allocation @und)% a discretionary bloc! grant from the central to the regional
government aimed at eAuali7ing the fiscal capacity of the regional government for 1$
years beginning in *++(. This fund is put into the DAB (Dana Alokasi Khusus)
=pecial Autonomy @und) in the 'o?A amounting to some /p. 1$ trillion (<=91.:
billion per year)% hich more than compensates Aceh for the decline in oil and gas
production. Accordingly% decentrali7ation has made Aceh among the richest provinces
in Indonesia. &y having such huge fiscal revenues% Aceh should have placed itself
among the most developed provinces in Indonesia ith a very lo poverty head count.
Coever% the incidence of poverty in Aceh remained unchanged. &efore the tsunami
it had the fourth highest poverty head count- *(.$6 in Indonesia and it is li!ely to
*
In this study the terms 'egislative Assembly and DP/ are used interchangeably hich reflects the
legislative role of the DP/. DP/ also hierarchical divided into three levels% DP/ or DP/"/I at the
national level% DP/D"I at the regional level and DP/D"II at the district or municipal level. Coever%
after decentralisation of Aceh% the DP/D"I at regional level is called DP/"NAD or DP/"A (Aceh)%
hile the DP/D"II at district or municipal level is called DP/"B (Babupaten or Bota) District or
Dunicipality)% through out this study% the author has used this formula to describe the legislative
assembly.
*
have increased since then.
E
This parado. implies the malfunction of the
decentrali7ation in the region. 4hat are the causes of such failureF Cas corruption
become the primary cause for this failureF
There ere to important studies hich had been conducted on the
implications of decentrali7ation on corruption% one conducted by the 1entral &an! of
Indonesia and another by Pad>a>aran <niversity. These studies concluded that after
being decentrali7ed% Aceh had become one of the most corrupt rather than one of the
richest provinces in Indonesia.
:
4hy has Aceh become so corrupt after being
decentrali7edF This Auestion has become the primary issue that this research ill try
to anser.
Prob!" St#t!"!nt
In Indonesia% generally corruption has been dealt ith through official public
commissions since the 1#5+s. Anti"corruption movements such as Transparency
International% I14 (Indonesian 1orruption 4atch)% and BPB (Komisi Pemberantas
Korusi) 1orruption Gradication 1ommission) have been created to fight corruption.
Despite ide coverage of local media that attempt to unearth corruption cases and
e.pose of arrested corruptors% corruption remains the primary problem of the nation.
$
G.perts claim that corruption in Indonesia has become a culture% a ay of life% and it
has become systemic.
8
?iving the impression that corruption has become acceptable
behaviour% it is no longer considered a rongdoing or a misdeedH rather it is due right
E
As the Dalay proverb said that 2seperti ti!us mati didalam lombong padi%3 hich means as 2a rat dies
in the bul! of paddy store3
:
Duri7al Cam7ah 2Borupsi di Aceh% pendudu! mis!in mening!at%3 Sinar !araan% (E1 Darch *++E)%
E
$
2Pemberantasan Borupsi ;alan di Tempat3 Komas "n#$ine Ihttp-))www%komas%&omJ (accessed *(
=eptember *++$)%
8
2Intervie ith Darmanto ;ayatman by Transparansi Indonesia3
Ihttp-)).transparansi.or.id)ma>alah)edisi*$.htmlJ% (accessed 1+ ;anuary *++$)
E
that one should be paid for any services provided. In such a setting% one ill be
alienated by the peers for being clean and loyal to the right principles. As ?erald
1aiden stated-
It is a situation here rong doing has become the norm% and the
standard accepted behaviour necessary to accomplish organi7ation goals
according to the notions if public responsibility and trust has become the
e.ception% not the rule. In this situation% corruption has become so
regulari7ed that organi7ation supports and bac!s rong doing and
actually penali7e those ho live up to the old norm.
5
In a such socio"political setting% people have become apathetic toard any
anticorruption policies. People developed a ne ay of thin!ing in terms of their
relation ith the state bureaucracy and politicians. Doney politics has become the
rule of the game for those ho ant to sei7e political poer and to remain in politics.
=imilarly% money has become the grease to gear up any bureaucratic processes% be it in
business or other social matters. In response to such a malady% e.perts on Indonesia
have approached the problem from many different perspectives% ranging from
economics% politics and morality. Accordingly% after long discussion and deep
evaluation of the groing demand of the regional political elites for greater provincial
political authority% the only e.it for the central government is through political reform%
the implementation of decentrali7ation and fiscal balance policies. This policy hopes
to bring government closer to the people% so that a good and clean local government
free of any forms of corruption can be reali7ed. The policy also hopes to enhance the
capability of the provincial government to formulate a better and responsive local
oriented development policy.
Coever% previous studies on decentrali7ation and corruption found that there
have been different implications of decentrali7ation upon corruption% depending on the
5
?erald G. 1aiden and Naomi 1aiden% 2Administrative corruption%3 in Publi& a'ministrati(e re(iew
(Day) ;une) 1#55% pp. E+1"E+#
:
nature or type of decentrali7ation that is implemented. &esides that% the si7e of the
country% the si7e of the population and the nature of the political system might also
affect the relationship beteen the to issues. Not to mention other perspective that
vies decentrali7ation as leading to disintegration% rather than integrating the country.
&ased on these different vies on decentrali7ation and corruption% this research
e.amines the lin!age beteen decentralisation and corruption in a provincial
government of Indonesia% ta!ing Aceh as a case study. It analyses hether ;a!arta0s
policy of decentralisation in Aceh has increased or reduced the incidence of corruption
in the region. Thus the folloing Auestion needs to be addressed urgently. To hat
e.tent does decentralisation affect corruption in AcehF Cas decentralisation reduced
corruption in AcehF
Ob$!cti%!& o' t(! Stud)
The visible character and treatment of corruption in Indonesia and NAD in particular
ma!es it a sensitive topic of discussion% and could lead to serious trouble if one is not
cautious. Therefore% it is sometimes frustrating to rite about something hich
everybody !nos about but hich fe dare ac!noledge openly. This study is going
to e.plore the ground that has not been adeAuately covered. Thus% this study ill try
to serve the folloing ob>ectives-
1. To e.plain the nature of decentralisation and its significance in Aceh.
*. To e.plain the nature of corruption and its significance in Aceh.
E. To e.plore the lin!age beteen decentrali7ation and corruption in the region.
:. To suggest political and administrative reforms that might help in controlling
corruption.
$
Si*ni'ic#nc! o' t(! Stud)
There are at least four reasons hy this study is important- firstly% Aceh has become
the centre of attraction for not only the Duslim but also the non"Duslim% particularly
after the earthAua!e and tsunami disaster that had !illed more than *++ thousand
people. =econdly% it is the strong hold of Islam in Indonesia and has become the pride
of the Duslim all over the country. Thirdly% it is a region hich has been blessed ith
a lot of natural resources and has become the generator for the development of
Indonesia economy as a hole. @inally% it is a region hich considered as the sole and
energy that holds Indonesia as an integrated /epublic of Indonesia. Coever% after
decentralisation% a survey by the 1entral &an! of Indonesia indicated that corruption
has reached an alarming stage in Aceh. This is an irony that Aceh% an Islamic
province% has been considered as the most corrupt province in Indonesia. This
problem has become the ma>or inspiration for this study.
This study% therefore% can contribute to the literature on public administration
and development. The findings of this study have the potential to provide useful
information not only for the government and anti"corruption movements% but also for
businesses% to evaluate and foresee the future socioeconomic climate in terms of
decentrali7ation and corruption. This ill provide insights for these parties ith better
and more comprehensive decision"ma!ing capabilities and to better assess the ris!s
related to the socioeconomic factors associated ith decentrali7ation reforms and
corruption.
This study ill ma!e a significant contribution to the academic literature by its
on uniAue ays- firstly% by corroborating certain findings of the cross"sectional
studiesH secondly% by e.panding the findings of those studies to possibly identify ne
determinants affecting corruption particularly in the province of AcehH and finally%
8
using a comprehensive set of data on Aceh% it identifies the precisely the relationships
pertaining to decentrali7ation reforms and corruption in the Aceh.
R!%i!+ o' t(! Lit!r#tur!
Despite the booming literature on decentralisation and corruption% there are relatively
fe case studies that focus specifically on the lin!age beteen decentralisation and
corruption. The main Auestion related to the lin!age beteen these to concepts is
that to hat e.tent does decentralisation affect corruption and vice versa. Does
decentralisation increase corruption or decrease corruptionF =ome argue that by
bringing the bureaucracy 2closer to the people3% decentrali7ation ill improve the
Auality of government and encourage competition beteen governments for mobile
resources% and facilitate the satisfaction of diverse local taste.
(
Kthers contend that
decentrali7ation can cause problem of coordination and% orsen incentives for
officials to predate and hinder any reform of the status Auo.
#

&anfield argues in )orrution as a feature of go(ernmental organi*ation%
argues that Ldecentrali7ed political systems are more corruptible% because the potential
corrupter needs to influence only a segment of the government% and because in a
fragmented system there are feer centrali7ed forces and agencies to enforce
honesty.0
1+
=ince there is limited centralised force to enforce honesty in the
fragmented system% it creates opportunity for people to involve in corruption.
(
=ee% Kdd"Celge @>eldstad% 2Decentralisation and corruption- A revie of the literature3% Utstein
Anti#)orrution Resour&e )entre +U,-% (1+ ;uly *++E)H Paul =eabright% 2Accountability and
decentrali7ation in government- an incomplete contracts model3% Guropean Gconomic /evie% :+ (1)%
(1##8)- 81"(#.
#
=ee% Caroul 1ai. and Daniel Treisman% 2=tate corroding federalism3% .ournal of Publi& /&onomi&s%
((% (*++:)- (1#"(:EH =onin% B.% 2Provincial Protectionism3% William Da(i'son 0nstitute% 4or!ing Paper
No. $$5% <niversity of Dichigan &usiness =chool (*++E)
1+
Gdard &anfield% 21orruption as a feature of governmental organi7ation3% .ournal of $aw an'
/&onomi&s% 1((E)% (1#5$)- $(5,8+$.
5
Prud0homme% in 1he 'angers of 'e&entrali*ation% implies that there are probably more
opportunities for corruption at the local level- firstly% local officials usually have more
discretionary poers than national decision"ma!ersH and secondly% local bureaucrats
and politicians are li!ely to be more sub>ect to pressing demands from local interest
groups in matters such as ta.ation.
11
In such an environment% Danor% in 1he oliti&al
e&onomy of 'emo&rati& 'e&entrali*ation% implies that decentrali7ation Lis alays
attended by an increase in the number of persons ho are involved in corrupt acts0%
although this may not imply that the overall amount of money diverted by corrupt
means ould also increase.
1*

'ederman et al% in A&&ountability an' )orrution2 Politi&al 0nstitutions 3atter%
argues that decentralisation practically improves transparency. It increases
accountability of the local government% because the sub"national government is easy
to monitor% and informational problems are less severe at the local level. Cence%
decentralised political system tends to have stronger accountability mechanisms
because it improves transparency.
1E
In addition% &reton in )ometiti(e go(ernments2
An e&onomi& theory of oliti&s an' ubli& finan&e% also suggests that decentralisation
creates a competitive environment% hereby the sub"national government ill
11
/emy Prud0homme% 2The dangers of decentrali7ation3 in 1he Worl' 4ank resear&h obser(er% Mol.
1+% No. * (August 1##$)- *+1"**+. =ee also% Mito Tan7i% 2@iscal federalism and decentrali7ation- a
revie of some efficiency and macroeconomic aspects%3 in Pro&ee'ings of the annual Worl' 4ank
&onferen&e on 'e(eloment e&onomi&s (4ashington D.1.- The 4orld &an!% *+++)% chapter 1:% *E1"*8E.
1*
;ohn Danor% 1he oliti&al e&onomy of 'emo&rati& 'e&entrali*ation (4ashington D.1.- The 4orld
&an! 1###)% 1+1
1E
Daniel 'ederman% Norman M. 'oay7a N /odrigo /. =oares% 2Accountability and corruption- political
institutions matter%3 /&onomi&s 5 Politi&s6 Molume 15% No. 1 (Darch *++$)H see also ;uan ;ose 'in7
and Alfred 1. =tepan % 2Toard consolidated democracies%3 .ournal of Demo&ra&y 5% (1##8)- 1:,EEH
Nas Tavfi!. @% Albert 1. Price and 1harles T. 4eber% 2A policy"oriented theory of corruption%3
Ameri&an Politi&al S&ien&e Re(iew (+% (1#(8)- 1+5,11#H ;ohn &ailey and Arturo Malen7uela% 2The
shape of the future%3 .ournal of Demo&ra&y (% (1##5)- :E,$5H =usan /ose"Ac!erman% )orrution an'
7o(ernment2 )auses6 )onse8uen&es6 an' Reform (1ambridge- 1ambridge <niversity Press% 1###)H
=imeon D>an!ov% 1aralee Dc'iesh% Tatiana Nenova and Andrei =hleifer% 24ho ons the mediaF3
National 4ureau of /&onomi& Resear&h (Day *++1) Ihttp-)).nber.org)papers)(*((.pdfJ
(accessed *+;anuary *++:)H ;ean ;aAues 'affont% and Dathieu Deleu% 2=eparation of poers and
development%3 .ournal of De(eloment /&onomi&s 8:% (*++1)- 1*#,1:$.
(
compete in providing good services to attract the public. 4hen several government
agencies provide e.actly the same service% it provides an alternative for the public to
choose from the more efficient agency. Cence% he suggests that competition beteen
levels of government ill lead to less corruption related to the provision of public
services for hich officials can demand !ic!bac!s.
1:

4eingast in 1he e&onomi& role of oliti&al institutions2 market#reser(ing
fe'eralism an' e&onomi& De(eloment% also argues that a federal state structure
contributes to a more honest and efficient government by providing for competition
beteen sub">urisdictions.
1$
=hleifer N Mishny% in an influential theoretical paper% also
concludes that states ith a very centrali7ed institutional structure and states ith a
very decentrali7ed one may suffer less from the damaging effects of corruption than
states ith an intermediate level of institutional centrali7ation.
18
1onversely% decentrali7ation has become an important theme of governance in
many developing countries in recent years% as many are dissatisfied ith the result of a
centralised system of government. Decentralisation promises the people ith a good
and responsive government% it brea!s the grip of central government and induces
broader participation in democratic government.
Gmpirical studies on the lin!ages beteen corruption and decentrali7ation also
found different results. Their findings suggest that the lin!age depends on the type of
decentralisationH and different type of decentralisation may have a different direction
of lin!age ith corruption. Treisman% in 1he &auses of &orrution2 a &ross national
stu'y% using Transparency International0s )orrution Per&etion 0n'e9 (1PI) as the
1:
Albert &reton% )ometiti(e go(ernments2 An e&onomi& theory of oliti&s an' ubli& finan&e6
(1ambridge- 1ambridge <niversity Press% 1##8)
1$
&arry /. 4eingast% 2The economic role of political institutions- mar!et"preserving federalism and
economic development%0 .ournal of $aw6 /&onomi&s an' "rgani*ation% (1##$)- 1"E1.
18
Andrei =hleifer N /obert 4. Mishny% 21orruption%3 Quarterly .ournal of /&onomi&s% (August
1##E)- $##"815.
#
main dependent variable in the regressions% finds that federal states are more corrupt
than unitary ones. Treisman finds that states% hich have more tiers of governance%
tend to have a higher perceived corruption inde.% and may also do a orse >ob in
providing public services. Ce attributes this to the collective action problem for semi"
autonomous central and sub"national officials in deciding ho much to e.tract in
bribes from businesses that both levels have the poer to regulate- L/estraints by one
OstateP level merely increases the pic!ings of the other0. According to Treisman% the
li!ely result is a sub"optimal high demands for bribes that end up driving many private
actors out of the mar!et. In other ords% competition beteen autonomous levels of
government to e.tract bribes leads to Lovergra7ing0 of the commons.
15

The proponent of the unitary state system% ?oldsmith% in Slaing the grasing
han'2 )orrelates of oliti&al &orrution in emerging markets% also finds positive
lin!ages beteen decentralisation and corruption. &y using a regression analysis on
corruption data hich is also based on corruption perception indices% he suggests that
federal or decentrali7ed systems are not favourable settings because they ma!e it
easier to hide corrupt practices (or intimidate histlebloers).
1(

Accordingly% it is important to focus on the specific type of decentralisation
and environment here it ta!es place. @isman N ?atti in De&entrali*ation an'
&orrution2 /(i'en&e from U%S% fe'eral transfer rograms% investigate the lin!age
beteen e.penditure decentralisation and corruption. They assume that
decentrali7ation ill only be effective if accompanied by the fiscal decentralisation
that enable local governments to generate their on revenuesH and to e.amine this
hypothesis empirically% they do it by studying the mismatch beteen revenue
15
Daniel Treisman% 2The causes of corruption- a cross national study.3 .ournal of Publi& /&onomi&s%
(*+++)- E##":$5
1(
Arthur A ?oldsmith% 2=lapping the grasping hand- 1orrelates of political corruption in emerging
mar!ets%3 Ameri&an .ournal of /&onomi&s an' So&iology (1###)- (88"((E.
1+
generation and e.penditure in <.=. states. They find that larger federal transfers are
associated ith higher rates of conviction for the abuse of public office% hich
supports the theory that soft budget constraints created by federal transfers are
potentially problematic. They find similar conclusions in cross"country regressions
covering $5 countries ith data referring to the period of 1#(+"#$. @isman N ?atti
also suggest that fiscal decentrali7ation in government e.penditure is strongly and
significantly associated ith loer corruption.
1#

There are fe studies on the lin!age beteen decentralisation and corruption in
Indonesia. Dost studies on corruption in Indonesia focus on corruption and the
patrimonial system of government. @or instance% /oc! in 1he Politi&s of De(eloment
Poli&y an' De(eloment Poli&y Reform in New "r'er 0n'onesia% focuses on the policy
of development and reform. Ce addresses the role of corruption in =uharto0s Ne
Krder economic policy. Ce found that despite =uharto being e.tremely successful in
building and sustaining a procapitalist% pro"integration policy ith the orld economy%
and pro"groth policy ith an eAuity political coalition% corruption played a central
role. /oc! claims that the creation of a patrimonial patron"client relationship beteen
a small number of government officials and a small number of &ukong entrepreneurs
reinforced =uharto0s basic commitment to development as the adoption of pro"groth
development policies hich had enabled him to collect more dividends. @urther he
argues that-
Doney politics% corruption and economic groth ere mutually
reinforcing as politicians learned not to sAuee7e the golden goose
(business) too hard and business learned to use its rents to gro the
economy. This pattern of cooperation beteen government and business
in Indonesia appears to have pushed at least some of the corruption and
1#
/aymond @isman% N /oberta ?atti% 2Decentrali7ation and corruption- evidence from <.=. federal
transfer programs%3 Publi& )hoi&e% Mol. 11E (1"*)% (*++*)- *$"E$.
11
rent"see!ing in a developmental direction by reducing transaction costs
ma!ing long"term investments by business profitable and productive.
*+
In a similar strand% DacIntyre% in 0n(estment6 Proerty Rights6 an' )orrution
in 0n'onesia% summari7es that-
Indonesia as able to generate strong investment flos and economic
groth hen its legal institutions ere so ea! and corruption so
idespread ere due to several reasons. @irst% various standard economic
variables combined to create an environment here high rates of return
could be e.pected. =econd% the political and institutional circumstances
of =uharto0s Indonesia ere such that they give the leader a poerful
incentive... to ensure that corruption is conducted in an orderly fashion
that as ithin the limits of hat the mar!et ould bear.
*1

DacIntyre argues further that-
OCoever%P the very institutional conditions that produced such a highly
centrali7ed political system and underpinned =uharto0s ability to contain
corruption and arbitrary behavior ithin tolerable limitsQthus e can
see political institutions as a !ey factor in the system of governance
hich produced strong investment inflos for many years% and also a !ey
factor contributing to the sudden and massive outflo of capital in 1##5
and 1##(.
**
@urthermore% in Politi&al /&onomy of )orrution in 0n'onesia6 Beefer tries to
focus on the relationship beteen democracy and corruption. Ce argues that despite
the emergence of free and competitive elections% the problems of corruption still
persist in Indonesia. Ce suggests the folloing three important reasons for a positive
relationship beteen democracy and corruption in Indonesia-
@irst% the under"development of democratic institutions and the
corresponding prevalence of 2clientelism3 ea!en electoral discipline on
political decision ma!ers. Indonesian democracy can be said to date only
from the 1### elections% not enough time for the political process to
mature and for clientelist motivations in politics to be displaced. =econd%
the time hori7ons of most politicians% particularly legislators% have
shortened since the =uharto era. <ntil the end of the =uharto era% fe !ey
decision ma!ers% beginning ith =uharto himself% e.pected to lose poer
in the near future. 4ith the advent of democracy and the still unsettled
nature of electoral institutions% legislators and even the highest party
*+
Dichael T. /oc!% 1he oliti&s of 'e(eloment oli&y an' 'e(eloment oli&y reform in New "r'er
0n'onesia% 4illiam Davidson Institute 4or!ing Paper Number 8E* (November *++E)- E5"E#
*1
Andre DacIntyre% 2Investment% property rights% and corruption in Indonesia3 in )orrution2 1he
boom an' bust of /ast Asia6 ed. ;. Gdgardo (Danila- Ateneo <niversity Press% *++1)
**
Ibid.% 1#
1*
leaders confront a higher probability of losing poer. Third% decision
ma!ing has not only splintered since Reformasi% but responsibilities are
diffuse and opaAue from the point of vie of voters. Moters are less able
to hold individual parties or legislators responsible for outcomes% leaving
parties and legislators ith feer incentives than similarly situated
legislators in more developed democracies to rein in corrupt behavior by
government officials.
*E
Another important or! that specifically focuses on the impact of
decentralisation on corruption in Indonesia is that of Ari Buncoro. Ce employs the
1=A (1entral =tatistics Agency) and ==? (=pecial =urvey of ?overnance) survey
results to e.amine the e.tent of corruption after the las of decentrali7ation ent into
effect in 1###. Ce found that the efficient grease hypothesis is really or!ing in
Indonesia% especially in ;ava. This implies that decentrali7ation in Indonesia has a
positive relation ith corruption.
*:
Again% Ari Buncoro and ;. Mernon Cenderson in
)orrution in 0n'onesia6 found that firms spend on average over 1+6 of costs on
bribes and over 1+6 of management time in 2smoothing business operations3 ith
local officials.
*$
This is supported by @iona /obertson"=nape in )orrution6 )ollusion
an' Neotism in 0n'onesia. =he found that among ordinary Indonesians% a ma>ority
(5(6) say that they pay bribes hen routinely interacting ith government officials
for registering the birth of a child% applying for a driver0s license or marriage
certificate% or even hen applying for a mandatory identity card.
*8
As Blitgaard asserts
that almost everyone ho lives and or!s in Indonesia goes along ith corruption
including foreign investors% aid donors% and international financial institution.
*5
*E
Phillip Beefer% The political economy of corruption in Indonesia% Kctober 5% (*++*)
Ihttp-))1.orldban!.org)publicsector)anticorrupt)@lagship1ourse*++E)BeeferIndonesia.pdfJ
(accessed *+ ;anuary *++:)
*:
Ari Buncoro% 2The ne las of decentrali7ation and corruption in Indonesia- e.amination of
provincial and district data%3 @aculty of Gconomics <niversity of Indonesia. Darch"Day% *++* (mimeo)
*$
Ibid.% *
*8
@iona /obertson"=nape% 21orruption% collusion and nepotism in Indonesia3% 1hir' Worl' Quarterly%
*+ (E) (1###)- $(#"8+E
*5
/obert Blitgaard% 21orruption- &eyond shame% apathy% futility3% paper presented at the book laun&h
of 3embasmi korusi% ;a!arta =eptember 15% 1##(
1E
1orruption is not only done by people of ea! economic ell"being% but also by the
rich and poerful.
*(

The literature survey carried out here reveals that studies hich specifically
analyse the lin!age beteen decentralisation and corruption are very fe% despite of
fact that decentralisation has become a popular theme in many developed and
developing countries. The e.isting theories on lin!age beteen decentrali7ation and
corruption are suggesting different results. =ome argue decentrali7ation ill improve
the Auality of government and encourage competition beteen local governments for
mobile resources% and facilitate the satisfaction of diverse local taste% therefore reduce
corruption. Kthers contend that decentrali7ation can cause coordination problem%
orsen incentive for officials to predate and hinder any change for the status Auo and
thus perpetuates corruption. Gmpirical researches also offer contradictory
conclusions. They found that different countries have different e.perience ith
decentrali7ation% depending on the definition of decentrali7ation that they adopt.
&eing aare of the different types of decentrali7ation and their lin!ages to corruption%
this study is the first comprehensive one on the lin!age beteen decentralisation and
corruption in Aceh in particular. In so doing% it ta!es into account all possible factors
related to the issue% as Alatas suggests that the study of corruption must ta!e into
account the historical% cultural and political settings of the phenomenon.
*#
4ithin this
perspective% this study ill try to fill the gap and enrich the academic literature in
public administration or management and this study can provide a better and
comprehensive approach to minimi7e corruption in Aceh.
*(
&aharuddin 'opa% 2Asal muasal !orupsi%3 4isnis 0n'onesia +1abloi'-6 *1 November *++#
*#
=yed Cussein Alatas% )orrution2 0ts nature6 &auses an' :un&tion ( Buala 'umpur- =. Abdul Da>eed%
1##+)% 1+
1:
T(!or!tic# 'r#"!+or,
This study e.amines the lin!age beteen decentralisation and corruption in
Aceh. In so doing% it is crucial to e.plain the three essential elements of the frameor!
of analysis used in this study- (1) decentralisation% (*) corruption and (E) the nature of
relationship beteen decentralisation and corruption. The frameor! of analysis as
such ill enable this study to develop an operational method of e.plaining the lin!age
beteen decentralisation and corruption in Aceh.
D!'inition o' D!c!ntr#i-#tion
Decentralisation is a term used to cover a broad range of transfers of decision ma!ing
from central government to regional% municipal or local governments.
Decentralisation generally refers to transfer of various properties or functions%
management and administration from the national or central government to the sub"
national government. The sub"national government includes entities such as
administrative field officers% local government% parastatals% non"governmental
organisation (N?K) and any structure representing the community or public.
E+

The <nited Nations has defined decentralisation as 2Qa plan of administration
hich ill permit the greatest possible number of actions to be ta!en in the areas%
provinces% districts% tons and villages here people reside.3
E1
According to ?. =.
1heema% decentralisation is 2Qthe transfer of planning% decision ma!ing% or
administrative authority from the central government to its field organisations% local
E+
/obertson% 24or!% overvie of decentrali7ation orldide- A stepping stone to improved
governance and human development%3 *nd International 1onference on De&entralisation fe'eralism2
the future of 'e&entrali*ing States;% Danila% Philippine (*$"*5 ;uly *++*)H =ee also Noore Alam
=iddiAuee% 'e&entralisation an' 'e(eloment2 1heory an' ra&ti&e in 4angla'esh (Dha!a- <niversity
of Dha!a% 1##5) *$
E1
The <nited Nation% De&entralisation for national an' lo&al 'e(eloment (Ne Ror!% 1#8*) 8:
1$
administrative units% semi"autonomous and parastatal organisations% local governments
or non"governmental organisations.3
E*
Coever% Dahood discards such a broad definition of decentralisation. Ce
vies decentralisation as a structure of government created at the local level
2separated by la from the national centre% in hich local representatives are given
formal poer to decide on a range of public matters.3 Dahood further argues that
2the area of authority of these structures is limited but ithin that area their right to
ma!e decisions is entrenched by the la and can be altered by ne legislation. They
have resources hich% sub>ect to the stated limits% are spent and invested at their on
discretion.3
EE

The concept of decentralisation is used by different scholars to refer to a
variety of governmental structures depending on the conte.t it is used. Thus% it is
important to provide a clear and unambiguous definition of the term for the purpose of
this study. In this study the term decentralisation is defined as the transfer or handing
over of authority and responsibilities for public functions by the national government
to a sub"national government to plan and implement decision concerning issues hich
are essentially local in nature. The e.tent of authority that national government
transfers to sub"national government depends on the form of decentralisation the
government ants to pursue.
According to Noore Alam =iddiAuee decentrali7ation can ta!e a number of
different forms depending upon the degree of authority is transferred from the central
government to local government% or agencies at a regional or local level. In this regard
he says-
E*
?. =. 1heema and D.A. /ondinelli% (ed) De&entralisation an' 'e(eloment2 oli&ies imlementation
in 'e(eloing &ountries (&averly Cills- =age Publication% 1#(E) 1(
EE
Phillip Dahood% (ed) $o&al go(ernment in the thir' worl'2 1he e9erien&e of troi&al Afri&a
(1hichester- ;ohn 4iley N =ons) *
18
The degree of responsibility for and discretion over decision ma!ing
that is transferred by the central government can vary a great deal. It
ranges from simply shifting or!"load to field agents of a central
ministry to the ultimate transfer of administrative and political authority
to legally constituted local government bodies.
E:

Kn the basis of the ranges of authority and nature of the agencies to hom the
central government transfers some of its functions and authority or shares ith at
different level% four broad types of decentrali7ation have been identified. These four
types of decentralisation are also contained in the >oint <NDP (<nited Nations
Development Programs) and ?overnment of ?ermany evaluation of programmes
supporting decentrali7ation processes in developing countries% namely-
E$

Politi&al 'e&entrali*ation- this type of decentralisation normally refers to
situations here political poer and authority have been transferred to sub"national
levels. The most obvious manifestations of this type of decentrali7ation are elected
and empoered sub"national forms of structures ranging from village councils to
state"level bodies. The concept implies that the selection of representatives from local
electoral >urisdictions allos citi7ens to !no better their political representatives and
allos elected officials to !no better the needs and desires of their constituents. It
reAuires constitutional or statutory reforms% the development of pluralistic political
parties% the strengthening of legislatures% creation of local political units% and the
encouragement of effective public interest groups. Thus% 2devolution3 is considered a
form of political decentrali7ation. Devolution refers to a full transfer of responsibility%
decision"ma!ing% resources and revenue generation to a local level of public authority
that is autonomous and fully independent from the devolving authority. <nits that are
E:
=iddiAuee% *8
E$
<nited Nations Development Program (<NDP))?erman @ederal Dinistry for Gconomic 1ooperation
and Development (&DS)- 1he UNDP role in 'e&entrali*ation an' lo&al go(ernan&e (Ne Ror!% <NDP
Gvaluation Kffice% *+++)% p. *# (bo. 1E).
15
devolved are usually recogni7ed as independent legal entities (such as municipal
corporations) and are ideally elected (although not necessarily).
E8
Accordingly%
/ondinelli identifies five fundamental characteristics of the ideal form of devolution-
1. 'ocal government units are autonomous% independent and clearly perceived as
separated levels over hich central government e.ercise little or no direct
controlH
*. These units have clear and legally recognised geographical boundaries over
hich they e.ercise authority and ithin hich they perform functionsH
E. The have corporate status and the poer to raise sufficient resources to carry
out specific functionsH
:. It implies the need 2to develop local governments as institutions3 perceived by
local people as belonging to them% or!ing to satisfy their needs and remain
sub>ect to their control and influenceH
$. It establishes a reciprocal% mutually beneficial and coordinative relationship
beteen the central and local governments.
E5
A'ministrati(e 'e&entrali*ation aims at transferring decision"ma!ing authority%
resources and responsibilities for the delivery of a select number of public services
from the central government to other loer levels of government% agencies% and field
offices of central government line agencies. The folloing are the ma>or types of
administrative decentrali7ation-
De&on&entration transfers authority and responsibility from one level of the
central government to another hile maintaining the same hierarchical level of
accountability from the local units to the central government ministry or agency hich
has been decentrali7ed. Deconcentration can be seen as the first step of nely
decentrali7ing governments to improve service delivery. It involves the shifting of
or!load from central government ministry to its on field staff located in offices
outside the national capital. =ince it is basically administrative in nature%
deconcentration implies no transfer of final authority from the central ministry hose
E8
=ee D.=. ;ohn and ;os 1hathu!ulam% 2Deasuring decentralisation- The case of Berala (India)3
Publi& A'ministration an' De(eloment6 *E. (*++E)- E:#
E5
D. A. /ondinelli% 2?overnment decentralisation in comparative perspective- Theory and practice in
developing countries3 0nternational Re(iew of A'ministrati(e S&ien&e6 vol. :5 (1#(1)- 1EE"1:$% cited in
=iddiAuee% *#"E+
1(
overall responsibility continues. In addition% it is the e.ecutive order that creates the
administrative apparatus of the deconcentrated unitsH hence the authority transferred to
these units can be ithdran through another e.ecutive order. Deaning that% the
central government maintains her control by draing guidelines and directives for the
field agents in discharging their responsibility.
E(
Delegation redistributes authority and responsibility to local units of
government or agencies that are not alays necessarily branches or local offices of the
delegating authority. 4hile some transfer of accountability to the subnational units to
hich poer is being delegated ta!es place% the bul! of accountability is still vertical
to the delegating central unit. In delegation% it is often that the central government
ministry delegates some functions and responsibilities to parastatal organisation or
public corporations% regional planning and area development authorities% hereby
these organisations possess a semi"independent status to perform their functions and
responsibilities.
E#
:is&al 'e&entrali*ation is a core component of decentralisation. It comprises
the handover of responsibilities that includes sectoral functions% as ell as the transfer
of on"sources of revenues to sub"national governments. The concept implies that
sub"national government must have an adeAuate level of revenues ,either raised
locally or transferred from the central government, as ell as the authority to ma!e
decisions about e.penditures. @iscal decentrali7ation can ta!e many forms% including-
1. =elf"financing or cost recovery through user chargesH
*. 1o"financing or co"production arrangements through hich the users
participate in providing services and infrastructure through monetary or labor
contributionsH
E(
Ibid *5% see also Bai Baiser% 2Decentrali7ation reforms3
Ihttp-)).orldban!.org)publicsector)decentrali7ation)P=IAforDecentrali7ation.pdfJ (accessed *+
;anuary *++8)H =ee Tulia ? @alleti% 2A seAuential theory of decentrali7ation- 'atin American cases in
comparative perspective3 Ameri&an Politi&al S&ien&e Re(iew6 Mol. ##% No. E (August *++$)- E*(
E#
Ibid.%
1#
E. G.pansion of local revenues through property or sales ta.es% or indirect
chargesH
:. Intergovernmental transfers that shift general revenues from ta.es collected by
the central government to local governments for general or specific usesH and
$. Authori7ation of municipal borroing and the mobili7ation of either national
or local government resources through loan guarantees.
:+

Arrangements for resource allocation are usually negotiated beteen local and
central authorities and they are dependent on several factors including concerns for
interregional eAuity% availability of central and local resources and local fiscal
management capacity. =ome level of resource reallocation is usually made to allo
local government to function properly. This clearly implies that ithout proper
defined fiscal decentralisation% political and institutional decentralisation ill have
little effectH and therefore% poorly articulated roles and resources deficiencies can
cripple local government and undermine incentives for local officials and elected
representative to perform effectively.
:1
Thus% fiscal decentralisation involves the
empoerment of the local government to raise and retain financial resources in
fulfilling their responsibilities.
:*

Pri(atisation or market 'e&entrali*ation2 This form is done in favour of non"
public entities here planning and administrative responsibility or other public
functions are transferred from government to voluntary% private or nongovernmental
institutions ith clear benefits to and involvement of the public. This often involves
contracting out partial service provisions or administration functions% deregulation or
full privati7ation. 'itvac! and =eddon state that privatisation includes-
1. Alloing private enterprises to perform functions that had previously been
monopoli7ed by governmentH
*. 1ontracting out the provision or management of public services or facilities to
commercial enterprises indeed% there is a ide range of possible ays in hich
:+
;ennie 'itvac! and ;essica =eddon% De&entralisation briefing notes6 (ed) (4orld &an! Institute)%
Ihttp-))siteresources.orldban!.org)4&I)/esources)biE51:*.pdhJ (accessed *+ ;anuary *++:)
:1
Paul =mo!e% 2Decentralisation in Africa- ?oals% dimensions% myth and challenges3 Publi&
A'ministration an' De(eloment% *E (*++E)- 5"18
:*
Baiser.% E1(
*+
function can be organi7ed and many e.amples of ithin public sector and
public"private institutional forms% particularly in infrastructureH
E. @inancing public sector programs through the capital mar!et (ith adeAuate
regulation or measures to prevent situations here the central government
bears the ris! for this borroing) and alloing private organi7ations to
participateH and
:. Transferring responsibility for providing services from the public to the private
sector through the divestiture of state"oned enterprises.
:E

Coever% =iddiAuee argues that the perception of privatisation as a form of
decentralisation is misleading. Dany vie 2privatisation3 not as decentralisation% but
as modification of poer and authority ithin the state. /ather it signifies a
redefinition and a narroing of the roles and functions of the state by alloing more
functions to be performed by private agencies.
::

In summation of the above discussion it is important to note that although these
four forms of decentralisation differ in their characteristics and implications% they are
not mutually e.clusive. In practice most governments adopt some combination of
these four types of decentralisation. =iddiAuee further maintains that despite analytical
convenience in distinguishing each type of decentralisation from the other% in specific
circumstances it may be difficult to distinguish e.actly hat 2mi.3 of decentralisation
a country pursues.
:$
Tuoting 1onyers% =iddiAuee states five basic criteria that should
be utilised hen specific decentralisation policies are e.amined-
1. The functional activities over hich authority is transferredH
*. The type of authority or poer hich are transferred ith respect of each
functional activitiesH
E. The level(s) or area (s) to hich authority is transferredH
:. The individual% organisation or agencies to hich authority is transferred at
each levelH and
$. The legal or administrative means by hich authority is transferred.
:8
:E
'itvac! and =eddon.
::
=iddiAuee% E1H see also /.1 1roo! and ; Danor% Demo&ra&y an' 'e&entralisation in South Asia an'
West Afri&a2 A&&ountability an' erforman&e (1ambridge- 1ambridge <niversity Press% 1##()
:$
=iddiAuee% E1
:8
Ibid.% E*
*1
Caving dealt ith the conceptual issues of decentralisation% the ne.t section
focuses on clarifying the conceptual issues of corruption- its definition and typology.
D!'inition o' Corru.tion
1orruption is difficult to define in a single sentence. It is a comple. and multifaceted
phenomenon. 4hat is possible is a reasoned description of corruption and isolate it
from hat it is not. 1orruption has been referred to as 2moral decay3 or to a ide
range of illicit or illegal activities associated ith the 2misuse of public poer or
position for personal benefit.3 It includes the act of bribery% hich implies the
betrayal of public trust and violation of established rules for personal benefit. In
general% the term corruption has a moral implication.
47
In addition% e.perts on
corruption agree that corruption can be defined simply as 2the misuse of public poer
for private profit or political gain.3
:(
Coever% there is a problem ith this definition.
for instance% ho are e going to differentiate corruption from mere patronage politics
and favouritism for electoral reasonsF 1an the act to serve the interest of political
supporter by politicians be considered as corruptionF
To solve this problem% corruption must be described according to here it
occurs- at the political or bureaucratic levels of the public sector% or ithin the private
sector. It% therefore% should be defined according to its intensity- hether it is isolated
or systematic. Kther specifications include- grand versus petty% local versus national%
personal versus institutional% and traditional versus modern.
:#
&ased on
:5
Arnold ;. Ceidenheimer% D. ;ohnston and M. 'e Mine (eds.)% Politi&al &orrution2 A han'book (Ne
&runsic!- Transaction% 1#(#)% in hich these three types of definitions are used as starting points for
analy7ing political corruption.
:(
/obert =. 'ei!en% 21ontrolling the global corruption epidemic%3 :oreign Poli&y% number 1+$ (4inter
1##8)- $$"5E.
:#
Paul Ceyood 2Political corruption- Problems and perspectives%3 Politi&al Stu'ies% vol. :$% number
E% (special issue 1##5)
**
Ceidenheimer0s or!s% Dar! Philip identified three broad definitions most commonly
used in the literature- public office"centered% mar!et centered% and public interest"
centered definitions.
$+
Publi& offi&e#&entere' 'efinition of &orrution refers to a
behaviour that digresses from the formal public duties of an official for reasons of
private benefit. In this regard ;.=. Nye says-
1orruption is a behaviour% hich deviates from the formal duties of a
public role because of private regarding (personal% close family% private
cliAue) pecuniary or status gainsH or violates rules against the e.ercise of
certain types of private regarding influence. This includes such behavior
as bribery (use of reard to pervert the >udgment of a person in a position
of trust)H nepotism (bestoal of patronage by reason of ascriptive
relationship rather than merit)H and misappropriation (illegal
appropriation of public resources for private"regarding uses).
$1
3arket#&entere' 'efinitions of &orrution is based on social or public choice
theory% utili7ing an economic methodology ithin a political analysis. ;acob van
Blavern in this regards says-
A corrupt civil servant regards his public office as a business% the income
of hich he ill see! to ma.imi7e. The office then becomes a
2ma.imi7ing unit3. The si7e of his income depends Q upon the mar!et
situation and his talents for finding the point if ma.imal gain on the
publics0 demand curve.
$*
Publi& interest#&entere' 'efinition of &orrution6 on the other hand% focuses on
behaviors% that e.ert negative impact on the elfare of the public. In the ords of
1arl @riedrich-
The pattern of corruption can be said to e.ist henever a poer"holder
ho is charged ith doing certain things% i.e.% ho is a responsible
functionary or office holder% is by monetary or other reards not legally
provided for% induced to ta!e actions hich favour hoever provides the
reards and thereby does damage to the public and its interest.
$E
$+
Dar! Philip% 2Defining political corruption%3 Politi&al Stu'ies% Mol. :$% number E% (special issue
1##5).
$1
;.=. Nye% 2Political corruption- A cost"benefit analysis%3 in Ameri&an Politi&al S&ien&e Re(iew6 'UI
(*)- :15":*5% in /9laining &orrution6 reprinted% ed. /obert 4illiams (<=A- An Glgar /eference
1ollection% *+++) :5
$*
;acob van Blaveren% 2The concept of corruption%3 in Ceidenheimer et al.% *$"8.
$E
Ibid.% 1+
*E
The definitions above have one common element- they attempt to classify
behaviour and identify pattern of corruption. =till% lin!ed to official behaviour%
representing the principal"agent"client (PA1) approach% /ose"Ac!erman narroly
defines corruption as any form of payments to agents by the third"party to influence
the agent0s decision that are not passed on to superiors.
$:
/ecent academic studies and international organi7ations have opted in favour
of more minimalist definitions% sufficiently broad to encompass most cases of
corruption. Transparency International% the Asian Development &an! and the 4orld
&an! use similar definition. The 4orld &an! ta!es its minimal or!ing definition the
abuse of public office for private gain and fleshes it out by identifying specific abuses-
Public office is abused for private gain hen an official accepts% solicits%
or e.torts a bribe. It is also abused hen private agents actively offer
bribes to circumvent public policies and processes for competitive
advantage and profit. Public office can also be abused for personal
benefit even if no bribery occurs% through patronage and nepotism% the
theft of state assets% or the diversion of state revenues.
$$
&y subscribing to minimalist definition of corruption% =yed Cussein Alatas
proposes a typology of corruption consisting of seven categories- transactive%
e.tortive% investive% defensive% nepotistic% autogenic and supportive.
$8

1ransa&ti(e &orrution refers to any mutual arrangement beteen donor and
recipient to the advantage of and actively pursued by both parties. =uch arrangement
normally involves either business and government or public and government.
/9torti(e &orrution refers to the situation here donor is compelled to bribe in order
to avoid harm being inflicted upon his person% his interest% or upon those person or
$:
=usan /ose"Ac!erman% )orrution2 A stu'y of oliti&al e&onomy ( Ne Ror!- Academic Press% 1#5()
8"5
$$
4orld &an!% !eling &ountries &ombat &orrution2 1he role of the Worl' 4ank. (4ashington% D.1.
1##5)
$8
Alatas% E:
*:
things dear to him. Defensi(e &orrution is considered as the behaviour of the victim
of e.tortive corruption. 1orruption occurs in self"defence. 0n(esti(e &orrution refers
to a situation here donor offer goods or services ithout any direct lin! to a
particular favour% rather it is done in anticipation of future occasion hen the favour
ill be reAuired. Neotisti& &orrution is also referred as neotism% hich connotes as
an un>ustified appointment of friends or relatives to public office% or the rendering to
them of favorable treatment% in pecuniary or other forms% and that act should violate
the norms and rules of the underta!ing. Autogeni& &orrution refers to an act of
stealing through deception in a situation hich betrays a trust. In this form of
corruption% normally it involves only the individual. @inally% suorti(e &orrution
hich does not involve money directly or any other immediate return% but it is an act
to protect and strengthen the e.isting corruption.
$5

Dorgan also develops a typology of corruption based on its severity. =he
claims that the e.istence of each form of corruption in a political system or
bureaucracy is not mutually e.clusive% rather its coe.istence freAuently occurs% and it
is common for the practice of to or more types of corruption to occur
simultaneously. =ome types act as medium of action for the other types.
$(
Dorgan
suggests five fatal forms of corruption-
4ribery refers to an act of giving any article of value to government official in
e.change for any act or omission in the performance of that official0s public function.
Tuoting /ose"Ac!erman% she maintains that there are to reasons hy people or
firms offer official bribes- to obtain access to government benefits and to avoid cost.
$5
Ibid.% E
$(
Amanda '. Dogan% )orrution2 )auses6 &onse8uen&es an' oli&y imli&ations% Asia @oundation
4or!ing Paper =eries% no # (Kctober 1#(#) Ihttp-)).asiafoundation.org)pdf)p11.pdfJ (accessed
*+ ;anuary *++:)
*$
Pillaging of state asset or theft of state asset refers to an act of stealing of state
assets% hich includes spontaneous privatisation of state assets by enterprise managers
and other officials in some transition economiesH the petty theft items such as office
eAuipment and stationary% vehicle% and fuelH theft of governmental financial resources
such as ta. revenues or feesH stolen cash from treasuriesH e.tended advances to
themselves that are never paid% or payment from fictitious 2ghost3 or!ers. Normally%
the perpetrators are usually middle"and"loer level officials. In some cases% this form
of corruption occurs as compensating for inadeAuate salaries.
Distortion of go(ernment e9en'iture% this type of corruption occurs hen
decision"ma!ing on public e.penditure becomes unrelated and irrelevant to national
vision for strategic development. ?overnment spending decisions are made in order to
ma.imise the benefit of individual decision"ma!er% instead of the public elfare. It
implies that government spending becomes a function private rather than public
interest.
Patronage% or &lientalism refers to as instrument through hich political poer
is acAuired and maintained by granting economic advantages to supporters in
e.change for political support. These economic advantages include employment in
bureaucracy or state industries% access to public goods and services% property rights%
and the right to participate in the mar!et system. Patronage"based government has
tendency to regulate economic activity ith a vie to e.panding patronage netor!. It
motivates politicians and their clients to deliberately fashion imperfect information in
order to benefit from them. 1lientalism resembles corruption hen the right to
participate in the mar!et system is allocated according to the discretion of political
sponsors. Accordingly% the to are contradicting ith universalistic% rule"bound
methods for conducting public business. @or instance% schools and clinics are built for
*8
supporters rather than those truly in need. Appointments are distributed to support
relatives or to repay debt. Kstentatious ealth is acAuired by those ho subvert or
circumvent the government. In fact% government ill not be responsive to general
interest hen favoritism and personal preference replace precedent and rules.
)ronyism can be distinguished from patronage by its higher degree of
personalisation% centralisation% or domination of rent distribution activity by individual
ruler or ruling family. <nder cronyism property rights are the principle good
distributed in e.change for political loyalty. It is the pleasure of the ruler that
maintains the property rights% rule of la is secondary to the authority of the ruler.
Thus% cronyism is an e.treme form of corruption%
$#
=imilar typology of corruption is embodied in the 1E articles of the Anti"
1orruption Acts No. E1 Rear 1### and Acts No. *+ Rear *++1 of the /epublic of
Indonesia. &ased on these 1E articles% there are seven forms of corruption idely
practiced in Indonesia- &ronyism6 bribery6 &orrution with theft an' without theft6
e9torti(e &orrution6 autogeni& &orrution6 gratifi&ation &orrution6 an' transa&ti(e
&orrution%
8+
Coever% among the various types of corruption% it is transactive and e.tortive
types that constitute the nucleus of corrupt behaviour or activity. Cence% other types of
corruption are vieed as a by"product of transactive and e.tortive forms of corruption.
This study% due to the centrality of transactive and e.tortive variants of corruption%
ill only focus on these to types of corruption in analysing the case of corruption in
Aceh.
Lin,#*! b!t+!!n D!c!ntr#i&#tion #nd Corru.tion
$#
Ibid.%
8+
=ee% Anti"1orruption Acts No. E1 Rear 1### and Acts No. *+ Rear *++1% articles number * to 1E.
*5
To interrelated Auestions are central to the analysis of lin!age beteen
decentralisation and corruption- (1) is there any relationship beteen decentralisation
and corruptionF And (*) hat is the nature of the relationship beteen decentralisation
and corruptionF The anser to these Auestions is hypothetically predicted on the
assumption that the relationship beteen decentralisation and corruption is both
positive and negative. =ome provide an optimistic assessment of the effects of
decentralisation on corruption% hile there are also vies that claim that the effects are
insignificant% ambiguous and conte.t"dependent% ith some at the opposite e.treme
ho assert that decentralisation e.acerbates the problem of corruption. The discussion
belo provides a better insight into the nature of the relationship beteen
decentralisation and corruption.
The proponents of decentralisation maintain that decentralisation provides a
multidimensional empoerment of local government. @irstly% it provides local
government ith authority over legislation and implementation of local regulation.
=econdly% decentralisation enables local government to raise it on revenues by
setting and collecting ta.es% borroing from higher level (central) government or the
mar!et% and allocating e.penditure on local service. @inally% decentralisation is
commonly associated ith democracy at local government. It improves the
participation of the people in local government. It also increases political competition
and transparencies at the local government. Caving smaller constituencies at the local
level% decentralisation ma!es monitoring easier and reduces the problem of distortion
of information. In the nutshell% being commonly associated ith local democracy%
decentralisation helps in improving local government accountability. And therefore% it
improves the capability of the local government to formulate policy that can meet the
needs and facilitate the satisfaction of the local population.
*(
It is asserted that devolution ma!es accountability more meaningful because of
the relationship and incentive it creates beteen representatives% bureaucrats and
citi7ens. Decentralisation improves the collective action of the people in evaluating
and monitoring the performance of locally elected representatives and public officials.
Kn the basis of their performance they are elected% re"elected or removed from office.
<nder the decentralised system% people develop an interest in monitoring the
operations of local government closely. Thus% it is argued that decentralisation ma!es
the local governments to be more responsive to local needs and as a result% it reduces
the misuse of public office (i.e. corruption) for personal gains.
Coever% some suggest that decentralisation can be a recipe for corruption. It
is argued that the decentralised political systems are more corruptible because% firstly%
decentralised system of administration has a very small constituency and a fragmented
system of government. The perpetrators of corruption% in such a system% need to
influence only a segment of government. =econdly% decentralisation% by increasing the
poer of the local government opens more opportunities for corruption at the local
level. The increase in the discretionary poer of the local officials vis"V"vis national
decision ma!ers leads to lac! of coordination beteen central and local governments.
In the absence of control from the central government% local bureaucrats and
politicians are li!ely to monopolise local government authority and revenues for their
on benefits and cronies0. @inally% it is argued that despite official rhetoric%
decentralisation is often leads to recentralisation or reinforcing central control.
Decentralisation does not empoer local peopleH rather it has been used as a faWade to
maintain the position of those ho hold the poer% i.e. capture of local government.
In the presence of struggle to capture control of local government% there is a
tendency for services to be overprovided to local elites% at the e.pense of non"elites or
*#
local populations. The central government% having very little information on local
needs% delivery costs and the amount actually delivered% cannot control the
performance of the local government that has better information on the local interests.
It is easy for local officials and local elites to cooperate in the pursuance of their
private interests% at the e.pense of the non"elite interest or general publics.
@rom the discussion above% there are to patterns of relationship beteen
decentralisation and corruption- either decentralisation increases opportunity for
corruption or reduces the chance of misuse and abuse of public office for personal
gains. In the light of the discussion above% it is important to !no hether ;a!arta0s
policy of decentralisation and empoerment of local elites in Aceh increases the
chances or reduces the possibility of misuse and abuse of poer for personal and
private gains. Thus% this study e.amines the folloing hypothesis-
1. Decentralisation is a useful institutional reform for reducing corruption in Aceh
*. Decentralisation has become a recipe for corruption in Aceh
Thus% the e.planatory poer of the frameor! applied in this study is futher
improved by identifying the factors that are conducive for either increasing or
decreasing the chances for corruption in the region. These factors are- the relative si7e
of political authority% fiscal transfers from the central government and finally the
political leadership in the Aceh government. These factors ould be useful in
e.plaining the incidence of corruption in the post"centralised system of governance in
Indonesia% ith special reference to Aceh as a cases study.
An#)tic# Mod!
Accordingly% this study adopts Blitgaard0s formula on corruption.
E+
C /corru.tion0 1 M /"ono.o)0 2 D /di&cr!tion0 3 A /#ccount#biit)0
@rom this eAuation it can be assumed that the opportunity for corruption is a function
of the si7e of the rents under a public official0s control (D) and the discretion that the
official has in allocating those rents (D)% and minus the accountability that the official
faces for his or her decisions (A).
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In a simpler form% opportunity for corruption
depends on the folloing factors-
1. Donopoly poer of officialsH
*. The degree of discretion that officials are permitted to e.erciseH
E. The degree to hich there are systems of accountability and transparency in an
institution.
Mono.o) Po+!r
An agent% either government official or politician is designated to perform specific
tas!s. &eing legally assigned to specific tas!s% the agent rises to become a monopoly
poers% and that create opportunities for corruption. In this case% corruption might
occur under to conditions% first% hen there are no agencies other than the
government hich can provide that service% such as licensing. =econd% the agent may
create the shortage% so that he may have opportunity to demand bribery.
Di&cr!tion#r) Po+!r
Despite having monopoly authority on specific tas!s% the rules and regulations
regarding the distribution of (or purchase) of government goods have created greater
opportunities for the agent to e.tract bribery. It can be assumed that the greater the
amount of discretion is given to agent% the more opportunities there ill be for them to
e.tract bribery. Agents can use their discretion to give 2favourable3 interpretation of
government rules and regulations to businesses in e.change for illegal payments.
81
Blitgaard% 5$
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Monitorin* #nd Account#biit)
4ithin the government administrative circle% principals very often come and go and
their term in the office is ell"defined% hile the agents are not% some of them have
been there ithin the circle for more that a decade% they are the e.perts of their tas!
and the rules and regulations that defined their position. &eing ne to the post% the
most crucial problem that challenges the principal is the asymmetries of information
about the running of public administration% and hich ma!es it difficult for him to
control effectively the actions of agents and hold them accountable for their actions
hen they fail to carry out an assigned tas!.
8*

In vie of that% this model suggests that opportunities for corruption are due to
three important technical aspects of government administration- the failure to rotate
agents beteen the posts% failure to use outside auditors and the lac! of consultation of
client of a particular bureaucratic agency. Accordingly% in analysing the lin!age
beteen decentralisation and corruption in Aceh% this study evaluate the implication of
decentralisation on the three factors in the local government in Aceh% and therefore
ansers the folloing research Auestions-
1. To hat e.tent does decentralisation affect the monopoly and discretion poer
of the local government apparatus in AcehF
*. Does decentralisation increase the accountability and transparency in the local
governments in AcehF
8*
=usan /ose"Ac!erman% 1orruption- A Stu'y of Politi&al /&onomy (Ne Ror!- Academic Press% 1#5()%
the principal here can be referred either the chief e.ecutive such as governor% regent and mayor ho
represent the people% or people themselves% ho are supposed to monitor and hold government
apparatus accountable for their action.
E*
M!t(od o' D#t# Co!ction
The study uses multiple triangulation method of data collection% it uses primary
sources such as official documentsH consultation and interviesH and a survey on the
people0s perception of the lin!age beteen decentralisation and corruption in AcehH
and secondary source of published academic or!s. Kfficial documents include
?overnment rules and regulations on decentralisation and the 1#:$ constitution. These
sources discuss the political structure and poer distributions beteen the central
government and regional government% ith special reference to the autonomous
region of Aceh. /egarding the incidence of corruption% the study ill brose the
official reports published by the governmental organi7ations such as the &PB (&adan
Pemeri!sa Beuangan) @inancial Auditory &oard)% the BPB% and also non"
governmental organi7ations such as the I14% International Transparency Indonesia%
International Transparency% =o/AB ((Soli'aritas 7erakan Anti Korusi) Anti"
corruption Dovement =olidarity) and ?e/AB (7erakan Antikorusi Rakyat) People0s
Anti"corruption Dovement) in Aceh% etc. The reports ill be analysed on to bases-
firstly% the incidence of corruption before and after decentrali7ation% and secondly% the
nature of decentrali7ation and its lin!age ith the incidence of corruption in Aceh.
1onsultation and intervies includes in"depth intervies ith distinguished
scholars and local political elitesH and focus group discussion ith members of local
anti"corruption movements% professional group and selected general population. The
intervie ill focus on the lin!age beteen decentrali7ation and corruption in Aceh.
It also conducts a survey on people0s perception toard lin!age beteen
decentralisation and corruption. The survey instrument is a structured Auestionnaire
containing a range of Auestions (see Appendi. 1) regarding perceptions of corruption
and actual e.periences ith corruption hich are combined ith the different
EE
respondent groups. The Auestionnaires are administered to three types of respondents
, households% business enterprises and public officials in the Dunicipality of 'angsa.
The total sample si7e is E++ respondents that are randomly selected- $+ respondents
from public officials% $+ respondents from private business enterprises and *++
respondents from households. The reason for choosing 'angsa city as the site for the
survey is due to the socio"political condition of the city hich is considered as lesser
affected by protracted political conflict and natural disaster% such as the tsunami that
occurred in December *8% *++:.
@inally% Published academic or!s include any published or!s on socio"
political and cultural development in the region. 'ocal nespapers% such as =erambi
Indonesia and Dodus Aceh are also resourceful data source for the contemporary
socio"political development of the region% and also% any periodical >ournal that cover
politics and development in Aceh% and Indonesia in general
C(#.t!r Outin!
This study is composed of si. chapters. The chapters are organi7ed in a
chronological and thematic order. 1hapter one is introductory. It contains the
statement of the problem% its significance% previous studies on decentralisation and
corruption in Indonesia and the theoretical frameor!. 1hapter to presents a
historical overvie of the political history of Aceh starting from its integration ith
Indonesia% to the inauguration of autonomous status of the region as Nanggrou A&eh
Darussalam% 1hapter three evaluates the 'as on local governments and its
implication on Aceh. 1hapter four e.plores the nature of corruption and factors that
led to the prevalence of corruption in Aceh before decentralisation. 1hapter five
e.amines the nature of corruption in Aceh after decentralisation too! affect in the
E:
region. 1hapter =i. e.plores people0s perception toard the lin!age beteen
decentralisation and corruption in Aceh. The final chapter provides a summary of the
ma>or findings of the study and e.plores their implications on socio"political
development in Aceh as ell as provides some recommendations and suggestions for
resolution or alleviation of the problem of corruption.
E$