UNODC and KPK pilot a Corruption Risk Assessment in the Forestry Sector in South-Sumatra Province, Indonesia

UNODC supports Anti-Corruption Agencies in ASEAN countries to identify corruption risk schemes and develop mitigation actions  

Posted on 11 January 2019.

 Deforestation for oil palm plantation concessions in Indonesia @Ulet Ifansati/GreenPeace


A century ago, most of South-Sumatra Province was covered in forest. According to the Ministry of Environment and Forestry in Indonesia, 24 million hectares of tropical forests have been destroyed between 1990 and 2015 alone, equivalent to the entire size of the UK, or 242,000km 2.

There is a growing recognition that corrupted licenses given to plantation firms in Indonesia are among the main underlying causes of Indonesia's deforestation, which has one of the highest rates in the world, belying the country's status as a top greenhouse gas emitter. Forest fires are also common to clear peatlands and regularly cause haze crises in the country. In South-Sumatra Province, according to Greenpeace, deforestation has led to the destruction of the habitats of tigers, elephants, rhinos and orangutans; in one generation, 69% of the habitat of elephants of Sumatra has been destroyed, and the number of orangutans has reduced by 50% between 1999 and 2015.

Two years ago, Indonesia became the first country to ensure that all its timber exports are verified as legally produced through a specific license. This is now an EU requirement for all timber imports from Indonesia - from construction timbers through to furniture and paper. Despite this, falsified licenses are an established corruption risk, and examples of common corruption schemes include falsified origin of logs being cut in protected forests, invalid Environmental Impact Assessments (EIAs), or falsified numbers of logs or size of the area authorized for plantations. In 2013, integrating all sources of data, the Corruption Eradication Commission in Indonesia (KPK) has found that 4.1 million hectares of protected forests were illegally overlapping with mining concessions and plantations.

These corruption schemes often occur at the local level. Plantations in Indonesia are typically run by large conglomerates. Following decentralization reforms in 1998, transferring political powers and resources at the provincial, regent and city level the operations of these conglomerates must be partially approved by local authorities. Local authorities are notably responsible for the review and approval of Environmental Impact Assessments and other technical requirements, and the sector is known for corruption: a KPK study highlights that since 2004, 88 officers were convicted for corruption at the provincial level, including 52 regents and vice-regents ( bupati), 23 mayors and vice-mayors, and 13 governors. Most of these cases involved taking bribes in relation to licensing approval and procurement. Legal permits to operate could also ensure revenues to the State, and another KPK study has found that an estimated 77-81% of the timber taken from Indonesian forests has not been reported to the State between 2008 and 2014, resulting in $US6.5 billion of state loss for timber only, while many other forestry products are not registered.

To strengthen accountability at the local level in the forestry sector in Indonesia, UNODC and KPK partnered to pilot a Corruption Risk Assessment (CRA) of forestry licensing processes in South-Sumatra. An inception workshop was organised in November 2018 in Palembang, South-Sumatra, gathering local authorities, civil society organisations and private sector representatives.

The findings of the CRA and the mitigation plan will be used for prevention and investigation, and included in the anti-corruption action plan of the Provincial Office of the Ministry of Environment and Forestry in South-Sumatra.

Piloted in South-Sumatra province, UNODC and KPK aim to replicate the Corruption Risk Assessment process in Kalimantan and Papua Provinces, where large areas of protected forests are endangered. This process can also be replicated in other corruption-risks areas, such as public procurement, health, or waste management.