Indonesia Corruption Watch (ICW) just launched the 2016 corruption cases handling trends. ICW found 482 corruption cases have been handled by the law enforcement, including the Prosecutor’s Office, Police as well as the Corruption Eradication Commission during 2016. From the 482 cases, as many as 1,101 suspects have been named, with the amount of state losses of Rp. 1.45 trillion, and the amount of bribes of Rp 31 billion. Six of these cases were development of on going cases being handled by the KPK, including the e-KTP case, the Akil Mochtar bribery case in the Buton election dispute, and the case of bribery on the Musi Banyuasin regional budget validation..

According to this study, , there is an alarming development of corruption, namely 62 corruption cases involving 61 village heads related to the management of village fund. The total state losses caused is amounting to Rp 10.4 billion. Corruption of village funds is found in the top five corruption-prone sectors namely regional budgets or APBD, education, village funds, social sector and transportation, respectively.

It can be said that the rise in the corruption of village funds is the direct result of the disbursement of Rp 47 trillion to all villages in Indonesia by Jakarta. Although the state losses ‘only’ amounted to Rp 10.4 billion, this signals the emergence of a new public resource that is prone to be embezzled by village officials. Corruption of village funds could threaten the financial objective of the decentralization policy in village governance, which is the prioritization of a development agenda that is considered best for the village community. Unfortunately, while the village funds program has only been introduced several years ago, there is already the phenomenon of local elites co-opting village funds for personal interests, especially the local elites at the village level.

In a study of the Corruption Eradication Commission in January 2015, there were 14 potential problems of management of village funds identified. One highlighted aspect is the human resources aspect, where local assistants have the potential of fraud by making use of the weak village officials. Similar to what occurred in the PNPM Pedesaan program, the mentors who were expected to assist the community and village officials instead committed corruption and fraud. Various cases of village funds corruption indicate that corruption is no longer limited to the political elites at the central and regional levels, but also down to the local elites at the villages (local elite capture).

To suppress corruption of the village funds, the central government and regional government should empower the existing internal control. The Inspectorate, or a similar regulatory body, should initially be placed in a relatively autonomous position, particularly from politicization and control from the highest officials at the central level (the Minister) and regional level (Regional Head), so that internal control would be effective. The central government also needs to act decisively towards village governments guilty of corruption, for example, to stop funding to the village for a period of one year. In addition to conducting monitoring, it is also helpful to maximize efforts of improvement in village financial management with all stakeholders. (Dewi/Adnan)