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The Danger of Health Sector Corruption during the COVID-19 Pandemic: the case of Indonesia

Date:26 May 2020

By Ratna Juwita, Ph.D Candidate at the Transboundary Legal Studies Department, University of Groningen.

Anti-corruption is an important aspect that has to be prioritized during the public health emergency. During the public health emergency, one of the most important activities in dealing with pandemics is to provide quality medical equipment, medicine, and health services in a sufficient number through the procurement process. Based on the international legal framework, Article 9 of the United Nations Convention Against Corruption (UNCAC) obliges the State Party to establish appropriate systems of procurement, based on transparency, competition, and objective criteria in decision-making, that are effective, inter alia in preventing corruption.

 Indonesia ratified the UNCAC on 19 September 2006 through the Law number 7 of 2006. Therefore, Indonesia must establish a procurement system that conforms with the UNCAC standard. The United Nations Office of Drugs and Crime (UNODC) further published a guidebook on anti-corruption in public procurement and the management of public finances to explain the implementation of Article 9 UNCAC. There are three phases of the public procurement process, those are the pre-tender, tender and post-tender stages. Each phase has corruption risks because government procurement usually allocated a significant amount of contract value and high discretion from the government to select the bidder which might cause a conflict of interest between the government and the bidder.

Indonesia has experience in facing the Avian influenza outbreak in 2003 before the COVID-19. After the outbreak, the Ministry of Health allocated funds for the procurement of medical equipment which was deemed necessary as preparatory measures for a new outbreak. The Ministry of Health proposed the fund to be used to procure buffer stocks of medical equipment necessary for the public health emergency. The ex-Minister of Health, Siti Fadilah Supari was convicted guilty of corruption due to the direct award (single-source procurement) of a state-owned company in the procurement of the medical equipment buffer stocks and acceptance of bribes from the other companies.

   1. The first act of corruption conducted by the ex-Minister of Health is the violation of the procurement procedure by giving the direct award to a State-owned company. The substantial evidence was the Letter of Ministry of Health number 15912/Menkes/XI/2005 dated 22 November 2005 concerning the direct award of PT. Indofarma Tbk to provide medical equipment buffer stocks for the anticipation of a public health emergency.[1] Also, PT. Indofarma Tbk’s core business is not producing medical equipment but the buying and selling of medicine.[2] PT. Indofarma Tbk, then ordered the medical equipment buffer stocks from another company which is PT. Mitra Medidua.[3] As a consequence of this process, the state financial loss is Rp. 5. 783. 959. 060, 00.[4]

   2. The second act of corruption in the procurement process by the ex-Minister of Health was the acceptance of graft from PT. Graha Ismaya concerning the procurement of medical and non-medical equipment for 9 regions, remote-outer islands, and disaster mitigation in 2007.[5] The ex-Minister of Health accepted graft from PT. Graha Ismaya amounted to Rp. 1. 900. 000. 000, 00.[6] The fatal violation of the procurement process is the fact that PT. Graha Ismaya was blacklisted by the Ministry of Health, therefore, should not be eligible to bid for any program in the Ministry of Health.[7] The owner of PT. Graha Ismaya came to the ex-Minister of Health to request that the blacklist status be lifted to be able to join the bidding.[8] In critical analysis, the pattern of corruption is similar to the first case, the violation of procurement procedures due to conflict of interests.

Based on the procurement laws and regulations in Indonesia, the procurement process has to be done through the designated process which is an open competition between the respective bidders and the procurement committee has to ensure that the process is transparent, objective, and accountable. However, based on the legal facts of the first case, the whole process was bypassed due to the recommendation of direct award from the ex-Minister of Health. In the second case, she intervened in lifting the blacklist status of PT Graha Ismaya in return for graft. She was convicted guilty by the Central Jakarta District Court and sentenced to four years of imprisonment.[9] Besides that, she had to pay compensation to the government due to the acceptance of graft from PT Graha Ismaya.[10]

The Organization for Economic Co-operation and Development (OECD), the Group of States Against Corruption-Council of Europe (GRECO), and Transparency International have warned countries about the potential corruption risks during the COVID-19 pandemic. It is natural that in a public health emergency, the prompt governmental decision is needed. However, the established anti-corruption mechanism in the procurement system should never be bypassed. Looking back to the past pandemic, from a hopeful perspective, Indonesia should prove that it has improved the current anti-corruption system in the health sector by learning from the past. To put it shortly, the COVID-19 pandemic is the litmus test of the Indonesian anti-corruption system in the health sector. Anti-corruption and public health emergency response must be framed as an integral concept, otherwise, the history of corruption in the procurement process for the public health emergency measures will only repeat itself.

[1] The District Court of Jakarta, Decision number 30 of 2017, 16 June 2017, p. 529.

[2] Ibid, p. 488.

[3] Ibid.

[4] Ibid.

[5] Ibid, p. 500-527.

[6] Ibid.

[7] Ibid.

[8] Ibid.

[9] Supra note 1.

[10] Ibid.