Cronyism 101 Taught by the Master: Indonesia’s Suharto

Brendan I. Koerner reports in the 26 March 2004 edition of Slate:

How Did Suharto Steal $35 Billion? – Cronyism 101

Mohamed Suharto has received a dubious honor from Transparency International, which named the former Indonesian president the most corrupt world leader of the past 20 years. With his family’s takings estimated at between $15 billion and $35 billion, Suharto topped such notorious kleptocrats as Ferdinand Marcos of the Philippines ($5 billion to $10 billion) and Nigeria’s Sani Abacha ($2 billion to $5 billion). How did the longtime Indonesian strongman amass his wealth?

Sssh! I’m working with Madame Abacha (and the Bank of Equatorial Guinea) to recapture a big percentage of her husband’s ill-gotten wealth. Unfortunately, Ibu Tien Suharto (“Madame Ten Percent“) failed to outlive her husband.

Through a system that his political opponents called KKN, the Indonesian acronym for “corruption, collusion, nepotism” [korupsi, kolusi, nepotisme]. Suharto handed control of state-run monopolies to family members and friends, who in turn kicked back millions in tribute payments. Those payments were usually cloaked as charitable donations to the dozens of foundations overseen by Suharto. Known as yayasans, these organizations were supposed to assist with the constructions of rural schools and hospitals but instead functioned as Suharto’s personal piggy banks. Doling out millions to one of the foundations was simply part of the cost of doing business in Indonesia during much of Suharto’s 32-year reign. Financial institutions were ordered to contribute a portion of their annual profits to a yayasan, for example, and wealthy Indonesians were expected to “tithe” a certain percentage of their salaries.

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