Raisa Annisa and Elisabeth Kramer
Indonesia’s state-owned oil and gas enterprise, Pertamina, is facing scrutiny in what may be the country’s most costly corruption scandal to date. In February 2025, the Attorney-General’s Office (AGO) identified nine suspects in a fuel import embezzlement scheme, including six Pertamina executives and associates of private companies.
The scheme allegedly reduced domestic refinery output to force imports through manipulated tenders at inflated prices, while also selling adulterated lower-octane fuel at premium prices. This operation reportedly cost the state nearly 197.7 trillion Indonesian rupiah (US$12.06 billion) between 2013–18.
Established in 1968, Pertamina is Indonesia’s largest state-owned enterprise (SOE). Its first director, Ibnu Sutowo — former general and ally of Suharto, who was president between 1965–98 — transformed the enterprise into an influential economic powerhouse while diverting profits to military interests, political campaigns and his lavish lifestyle.
This triggered Suharto’s earliest corruption probe. The 1970 Commission of Four Report found that Sutowo had failed to transfer the required revenue to the state. Despite these findings and Pertamina’s 1974 financial crisis, Sutowo was never charged and remained director until 1976, establishing a pattern of corruption among politically connected figures that persisted through the post-Suharto era. In 2019 Bambang Irianto, former head of Petral — a Pertamina subsidiary — was sentenced to nine years’ imprisonment for bribery, while former Pertamina CEO Karen Agustiawan was convicted of corruption in 2024.
The February 2025 Pertamina scandal goes beyond abstract state losses, with a direct impact on citizens’ daily lives. Besides tricking the public into purchasing low-quality fuel for higher prices, the fuel itself is believed to have caused widespread damage to vehicles.
The resulting higher maintenance costs and potentially shortened engine life place additional financial burdens on vehicle owners. Lower-income Indonesians were hit hardest by the cascading price increases. In more remote regions, Pertamina often has a monopoly, leaving consumers with no choice but to buy lower-quality fuel at higher prices.
The loss of faith in Pertamina products also triggered a migration to government-subsidised fuel or other companies. If this trend continues, the government subsidy burden will rise while Pertamina profits drop, further exacerbating state losses from the scandal.
If mismanagement and corruption within SOEs continue unchecked, there will be further repercussions for Indonesians. Revisions to the SOE Law passed in early 2025 establish a sovereign wealth fund set to hold US$900 billion SOE-linked assets. It grants SOEs privileges including capital injections, direct appointments to National Strategic Projects, involvement in public-private procurement processes and presidentially assigned monopolies. It also shields SOE executives and employees from corruption charges by revoking their classification as state officials. Given the vast government funds and resources that SOEs control, strict oversight and accountability must be ensured — any destabilisation can impact the national economy.
The prosecution of the Pertamina corruption scandal by the AGO, not the Corruption Eradication Commission (KPK), reflects shifting political attitudes towards fighting corruption. Once the leading institution in fighting high-profile corruption cases, KPK’s diminished powers following the 2019 legal revisions and 2025 budget cuts have raised doubts about its future role. Unlike KPK, the AGO can only prosecute individual cases to recover stolen funds, with no role in addressing systemic corruption. The AGO’s growing prominence signals a returning focus on corruption as an individual crime and a retreat from tackling systemic corruption through institutional reform.
While it is unlikely that the Pertamina corruption case was politically motivated, the timing and handling of the case suggest at least some political calculation.
Not long after President Prabowo Subianto’s 100 days in office, the AGO consistently stressed that corrupt activities took place between 2018–23 under the previous administration. Responding firmly to this scandal allows the Prabowo administration to position itself as ‘cleaner’ while diverting attention away from ongoing issues.
Plus, the case emerged soon after the government announced it would centralise control over SOEs under one super-holding company, raising questions about whether the scandal was used to justify Prabowo’s plans to curb the autonomy of SOEs.
The case also offers a convenient opportunity to clear out six Pertamina executives and install Prabowo loyalists. The director of Pertamina appointed in January 2025 is Simon Aloysius Mantiri, former treasurer of Prabowo’s Gerindra Party.
Mochamad Iriawan, a former national police commissioner general who joined the Gerindra Party in 2023, was appointed as Pertamina’s president commissioner in November 2024. Condro Kirono, another former national police commissioner general and a member of Prabowo’s election campaign team, was also appointed as commissioner in June 2024.
Pertamina apologised for this scandal, but Indonesians have good reason to be cynical given the questionable integrity of Prabowo’s anti-corruption rhetoric. He was absent from World Anti-Corruption Day commemorations, appointing Budi Gunawan — a named suspect in a major police corruption case — to attend on his behalf. Prabowo has also proposed pardoning those accused of corruption if they return what they stole, raising concerns that corruption deterrents may be relaxed under his watch.
Indonesia’s corruption perception score improved slightly in 2024. But continued progress in corruption eradication is at stake, with ultimate responsibility resting on the President. If he aspires to be a reformer, he must move beyond words and towards decisive action.
Raisa Annisa is a PhD Candidate at the School of Social Sciences, UNSW Sydney. Elisabeth Kramer is Senior Lecturer at the School of Social Sciences, UNSW Sydney.
Source: East Asia Forum
