Indonesia passes controversial graft court bill

Indonesia's parliament on Tuesday passed a controversial corruption court bill that anti-graft watchdogs have warned is likely to undermine the fight against endemic corruption in Southeast Asia's biggest economy.

In a blow to the court's independence, the bill relaxed a previous rule on the composition of the panel of judges. The court has enjoyed a 100 percent success rate due in part to the use of ad hoc judges and their majority on the panel.

However, the powerful Corruption Eradication Commission, or KPK, was allowed to keep its power to prosecute suspects and carry out wiretaps.

The panel of judges at the corruption court previously had to consist of two career judges and three ad hoc judges, helping ensure independence.

Under the new law, the head of a district court or the supreme court can decide the composition of the corruption court.

"This will mean less independence in the corruption court and gives more power to the district court," said Adnan Topan Husodo of Indonesia Corruption Watch, an independent body, adding the group may file an appeal to the Constitutional Court.

Husodo said that under the new law, suspects could easily bribe the head of a district court to ensure they ended up with the judge they wanted. The judiciary is rated among Indonesia's most corrupt institutions.

The law also means each of Indonesia's 33 provincial capitals will have a corruption court. There is currently only one in Jakarta, although some legislators had wanted to set up about 500 district-level corruption courts, which could have strained resources and created more bureaucracy.

President Susilo Bambang Yudhoyono had urged that the bill not be rushed through parliament in a form that hindered the fight against graft.

Indonesia needs billions of dollars from domestic and foreign investors, but endemic corruption, red tape and an unpredictable legal system all serve as deterrents.

Yudhoyono promised to tackle graft when elected in 2004 and has made some progress, thanks mainly to the KPK and the corruption court. The perception he is serious about graft has helped boost the rupiah currency, stocks and bonds.

Indonesia has also been climbing up some rankings measuring graft and the ease of doing business, albeit from low levels.

But some parliamentarians have been keen to limit the KPK's role in investigating cases and give the authority to prosecute back to the Attorney General's office, another body in need of reform.

Several lawmakers have already been sent to jail by the corruption court. Others are awaiting trial, prompting corruption watchdogs to warn that this is why members of parliament wanted to curb the powers of the court and the KPK.

There has been a spate of bills passed in the final days of the current parliament, although the house has often appeared half empty despite the need to complete legislation.

Adding to concerns about the battle against graft, the KPK also appears to have been weakened in a power struggle with the police and faces a power vacuum after police named three officials as suspects in criminal investigations.

JAKARTA, Sept 29 (Reuters)