BUSINESSWEEK ONLINE: JULY 3, 2000 ISSUE

International -- The Stars of Asia -- Policy Makers

Marzuki Darusman (int'l edition)

Marzuki Darusman
Marzuki Darusman
Attorney General
Indonesia
Marzuki Darusman had a privileged upbringing. The son of an Indonesian diplomat, Darusman spent his formative years in Europe, where he acquired a taste for the more equitable social norms of the West. Whenever he returned home to the impoverished island of Java, the extreme class and economic differences made Darusman feel awkward in social situations with other Indonesians. ''Creating a level playing field,'' recalls Darusman, ''was an elemental obsession.''

Now he is getting his chance to bridge the gap--and risking his life to do it. Appointed Attorney General last November, Darusman, 55, is prosecuting cases that symbolize the inequities of Indonesian society. Corruption, mass murder, and human rights abuses during the three-decade rule of former President Suharto are all on the agenda. Indonesia is now trying to hold accountable a privileged class that exploited the vulnerable. ''This is a push to create a situation where there is at least a sense of decency and rightness,'' Darusman says.

His caseload is a wide-ranging corruption investigation of Suharto, his family, and his cronies. The case had been closed in mid-1999 by Darusman's predecessor under pressure from army generals loyal to Suharto. After their leader, General Wiranto, was taken off active duty by President Abdurrahman Wahid soon after his election, Darusman reopened the case. Then he took the unprecedented step of placing Suharto under ''city arrest'' and putting his closest business associate, Mohamad ''Bob'' Hasan, behind bars to keep him from tampering with evidence. Prosecutors are studying the records of several ''charitable foundations'' that were chaired by Suharto and run by Hasan.

Darusman also is prosecuting Wiranto, the former armed forces commander, for crimes against humanity in East Timor. The Wiranto case is based on eyewitness reports that his troops carried out a scorched-earth and mass-murder campaign in the former Portuguese territory last September. The case gave President Wahid the ammunition to boot Wiranto from his powerful cabinet post. It also paved the way for Darusman to convict several Wiranto subordinates for human rights violations in the gas-rich province of Aceh.

Still, Darusman is reluctant to go too far. ''We'll have to stop at the point where the public feels that we've settled the scores of the past and not go beyond the point where it would start a witch-hunt,'' he says. Darusman says he'll throw the book at Suharto and leave clemency ''in the domain of politics.'' Indeed, Wahid has said he would pardon Suharto if the former President is convicted of corruption--and if he turns over $25 billion of his alleged fortune to the state.

INSIDE TRACK. Flanked constantly by bodyguards, Darusman is the third-most-heavily guarded Indonesian government official, after Wahid and Vice-President Megawati Sukarnoputri. Every day, Darusman's security men change his schedule to confuse would-be assassins. But he's not about to back down. He sees his current job as the challenge he has been preparing for since he went into politics in the 1970s. Convinced that the only way to make a difference is from within the system, Darusman spent 15 years as a member of Parliament for the ruling Golkar party, representing Bandung, West Java, where he graduated from law school. Then he served on the National Human Rights Commission for seven years, investigating complaints against the army of kidnapping, mass murder, and gang rape.

A driving ambition also plays a major part in his character. In 1992, he told an Indonesian magazine that ''any self-respecting politician would want to become President.'' In Suharto's Indonesia, such a phrase was tantamount to submitting one's candidacy. Golkar immediately struck his name from the list of the party's candidates in the 1992 election. Today, Darusman insists that he does ''not really'' covet the presidency.

He proved his leadership qualities months before he became Attorney General. When Golkar was torn apart last year by a rift between Suharto loyalists and reformists, Darusman led an internal coup and put himself in charge of a pivotal committee to remake the party. He helped galvanize support for Wahid, a tolerant Islamic cleric from outside the party, as a presidential candidate. ''I'm not fighting against the system. I'm trying to modify it,'' he says. So far, Darusman has what it takes to do that.



Lee Moo Young (int'l edition)

Lee Moo Young
Lee Moo Young
Commissioner Gen.,
National Police Agency South Korea
If Seoul is less and less the scene of brutal clashes between riot police and fury-prone demonstrators, thank the country's top policeman. Lee Moo Young, 56, has spent his past seven months as Commissioner General of the Korean National Police Agency making the once-notorious force a kinder, gentler institution--and one that's doing a better job of fighting crime.

Lee started with a game plan aimed at ending mistrust, corruption, inefficiency, torture, and other abuses associated with South Korea's 95,000-strong police force. In December, he launched a 100-day reform campaign targeting rank-and-file officers. He gave them 221 goals, from streamlining red tape to stamping out teenage prostitution in a Seoul red-light district known as Miari Texas. The agenda was loaded with sweeteners to boost morale: shorter work hours, expunging of past records, and an electronic reporting system to slash workloads.

Happier officers do their jobs better, and arrests of violent criminals are up 10%, while the overall crime rate has dropped 13.5%. ''Corruption arises from poor working conditions,'' says Lee, a lifelong officer who rose through the ranks vowing to rid the police force of its authoritarian image.

Lee also has done much to ease tense relations with the public. Surveys show that more than three-quarters of South Koreans believe officers are friendlier now. And demonstrations are noticeably less violent after Lee banned the use of tear gas against protesters--a big change since police fired 130,000 canisters during 1997, the most violent recent year of demonstrations. Lee also makes greater use of policewomen, figuring angry protesters will be less inclined to strike them. The strategy worked. ''One female officer on the front line is equivalent to 10 male officers in riot gear,'' says Lee. Lee aims to raise the number of women recruits tenfold this year, to more than 600, and plans to raise women's share of the force to 4% by 2003. Lee, who with his wife hikes mountain trails several mornings a week, says he disagrees with the widely held Confucian belief in Korea that the presence of women weakens a group. Lee admits it will take time to change all the ''old habits and bad customs that have been building for 55 years.'' But he's sure walking the right beat.



Cacuk Sudarijanto (int'l edition)

Cacuk Sudarijanto
Cacuk Sudarijanto
Chairman,
Indonesian Bank Restructuring Agency
Indonesia
Cacuk Sudarijanto first challenged Indonesia's entrenched business interests in 1992. As second-in-command at long-distance telephone company Indosat, he decided against buying telecom equipment from a business partner of a Suharto family member. For daring to say no to the Suhartos, he was removed and sent to Massachusetts Institute of Technology for a three-month management training course. One day in class, while reading a required short story by Franz Kafka on the perils of blind obedience, Sudarijanto burst into tears. The comparisons to home were clear. ''When you're working under absolute authority, no value is in force except obedience,'' says the 52-year-old Javanese.

But the tables have turned in Indonesia. Sudarijanto now heads the agency charged with selling the seized, ill-gotten assets the Suharto family accumulated during those years of blind obedience. Since his appointment as chairman of the Indonesian Bank Restructuring Agency (IBRA) in January, Sudarijanto has managed to engineer quick changes in what had been a moribund institution unable to carry out its mandate. In short order, he sacked some deputies who were seen to be soft on cronies and he broke two political logjams to allow the sale of Indonesia's largest auto assembler, Astra, and its largest private bank, Bank Central Asia. ''The bottom line is that no one is indispensable,'' says Sudarijanto, now the one commanding obedience. ''This is for the benefit of Indonesia.''

How well Sudarijanto does at IBRA is vital to Indonesia's economic recovery. The International Monetary Fund has linked further aid to Jakarta to its ability to raise funds for the national budget through IBRA's sales of seized assets. IBRA plans to raise $2.5 billion this year and clean up 61 nationalized banks.

After his telecom career was cut short, Sudarijanto spent the next eight years consulting and becoming active in the pribumi, or indigenous Muslim, business community--where he became friendly with now-President Abdurrahman Wahid. He joined the world of banking as an executive at Bank Mega, one of the few Indonesian banks to come out of the financial crisis. Three months after Wahid's election, Sudarijanto was tapped to revive IBRA. Sudarijanto remains so close to Wahid that his meetings with visitors are occasionally interrupted by telephone calls from the President.

Colleagues of the Indonesian-educated engineer are in awe of the ease with which Sudarijanto keeps his wits about him in the midst of chaos. Sudarijanto says it comes easy to him: He got used to it in the 1970s at IBM Indonesia, where he rose through the ranks and dealt with the daily disorganization typical of Third World countries. Part of his responsibility included the daunting job of paring down expatriate staff. ''I'm a man of crisis,'' says Sudarijanto. So with Indonesia recovering from one, this man is right where he belongs.



Chen Shui-bian (int'l edition)

Chen Shui-bian
President
Taiwan
''Taiwan stands up!'' With those ringing words, Chen Shui-bian inaugurated his term as President of Taiwan on May 20 and ended 53 years of one-party rule by the Kuomintang (KMT). Chen's words echoed Mao Zedong's famous pronouncement at Tiananmen Square half a century earlier: ''The Chinese people have stood up.''

But while Mao was a revolutionary who ushered in an era of chaos, Chen is a former top-notch trial lawyer who approaches his new job with the careful deliberation of an attorney preparing for the most important case of his career. Certainly, taking over Taiwan's presidency at a delicate period in relations with the mainland is one of the most important tests any politician has ever faced. Because Beijing views Chen, 49, as a dangerous pro-independence radical, his biggest and most immediate challenge has been relations with China. Chen's inaugural speech masterfully struck a balance between mollifying Beijing and asserting Taiwan's own interests. As he goes along, walking that fine line will demand all the diplomacy he can muster.

But Taiwan's voters didn't elect Chen for his stance on China as much as for his promise to clean up corruption. Known as ''black gold,'' Taiwan's tangled web of corruption involves gangsters, politicians, and local businesses and grew sinuous and strong under KMT rule. The straight-shooting Chen, a guiding member of the Democratic Progressive Party, proved his mettle fighting black gold as mayor of Taipei: He increased government efficiency, cracked down on graft, and shut down the vice dens.

No one shows better than Chen how raw, spirited talent can rise to the top in Taiwan. Born to a tenant-farming family, he was so sickly as a newborn that his parents didn't even register his birth until several months later, when it was clear that he had a good chance at survival. They had to borrow money to pay for his school, but the investment paid off. A star student, he consistently graduated at the top of his class. He ranked first among all the students admitted to the most prestigious university program in the country, the law department at National Taiwan University. During his junior year, he took the bar exam and scored the highest grade in the country--becoming Taiwan's youngest lawyer.

In 1979, Chen defended a group of opposition figures after a violent demonstration in Kaohsiung. Among those in the dock under the martial law regime was Annette Lu, now Chen's vice-president. The trial galvanized Chen's political instincts. In 1981, he won a seat on Taipei's City Council, marking him as an up-and-comer in the opposition.

Chen painfully learned what a dubious distinction that was. In November, 1985, an assassination attempt on his wife left her permanently paralyzed. The following June, Chen began serving an eight-month sentence for politically motivated libel charges. But jail didn't dull his instincts, and he rose up the political ladder. Defeated in 1998 when he ran for mayoral reelection, he redoubled his efforts, which paid off with his March victory. Chen has a tough agenda. But he knows the issues and has proven himself one of Taiwan's best and brightest.



Andrew Sheng (int'l edition)

Andrew Sheng
Andrew Sheng
Chairman,
Securities & Futures Commission
Hong Kong
| Video Interview |
As Hong Kong's stock market struggles to shed its Wild West image, the city can count itself lucky to have an out-of-town sheriff policing its markets: Andrew Sheng, chairman of the Securities & Futures Commission. Sheng is an ethnic Chinese Malaysian who began his career at Malaysia's central bank, where he worked his way up to chief economist before joining the World Bank in 1989. After a five-year stint at the Hong Kong Monetary Authority, Sheng took over as SFC chairman in October, 1998, the low point of the Asian meltdown.

He immediately set out to revamp Hong Kong's crazy quilt of securities laws and as chairman of a government task force, has led a crusade to bring the laws up to international best practices. The two-year effort now awaits approval by Hong Kong's Legislative Council, which is scheduled to take up the bill later this year.

In Hong Kong, where stock market scamsters generally are let off with the mildest of slaps on the wrist, the new law will make insider trading a criminal act rather than merely a civil violation. Just as important, the omnibus Securities & Futures Bill marks a philosophical shift toward more disclosure and greater transparency. ''Good, reliable, and timely information is a market fundamental,'' preaches the 53-year-old Sheng.

Sheng hasn't been standing still while the legislation is pending. Since taking office, he has introduced a slew of new disclosure rules for listed companies governing everything from connections to a business group to outlining for shareholders possible liabilities associated with investments in joint ventures. He's spearheaded the push toward a more U.S.-style disclosure-based system for the city's second bourse, the Growth Enterprise Market (GEM), rather than simply relying on outside enforcers from the stock exchange or his own SFC.

Sheng is a believer in the ''buyer beware'' school of investing, but he's determined that investors know a lot more than they have in the past. The need for ''improved transparency is very much a lesson we drew from the Asian crisis,'' says Sheng. ''We are living in a global market world which, unfortunately, has local regulatory frameworks and practices.''

Not everybody likes Sheng's attempt to raise the bar of what's acceptable in securities and futures markets. His aggressive stance has earned brickbats from some in Hong Kong's tight-knit financial community. A senior stock exchange official accuses the SFC of taking an unduly harsh line toward GEM and ''ruling for the sake of ruling rather than [doing] what's important for Hong Kong.''

Sheng doesn't see things that way. Nor do most of the foreign investors and investment banks that are playing an increasingly important role in Hong Kong. Most of them would agree that Malaysia's loss has been Hong Kong's gain.



Gothom Arya (int'l edition)

Gothom Arya
Gothom Arya
Election Commissioner
Thailand
Gothom Arya, 46, got his first taste of activism as a PhD student in the streets of Paris during the fiery protests against then-President Charles de Gaulle in 1968. ''I have been an activist pretty much my whole life,'' declares Gothom, who speaks English with a mixture of Parisian and Thai accents. For the next 28 years, while teaching electrical engineering at Bangkok's Chulalongkorn University, he used his off hours to campaign for human rights and democracy. He was a pioneer of election monitoring, serving with Bangkok-based PollWatch, which sent him to Cambodia, Indonesia, and India to observe their elections in the 1990s.

Those experiences serve Gothom well in his current role. He is one of Thailand's five Election Commissioners, appointed under the new constitution to clean up notoriously dirty Thai politics. He knows what makes free and fair elections, and he's trying to make them happen in Thailand. ''I spent my life in education, and this job is more or less about educating,'' he says.

The most outspoken of the commissioners, Gothom is emblematic of the change that is sweeping through Thailand's electoral system. After elections in March, the commissioners barred an unprecedented 78 of 200 parliamentarians from taking office because of suspected vote-buying and then ordered new polls. When not investigating electoral abuse, Gothom now visits rural villages, preaching against the evils of vote-buying.



ONLINE ORIGINAL: A Chat with Gothom Arya

Gothom Arya, one of Thailand's five Election Commission members, has been working to clean up Thai politics and the electoral process. He recently spoke to Business Week Asia Correspondent Frederik Balfour. Here are edited excerpts of their conversation:

Q: How did you get involved in the political cleanup campaign?
A:
I've always been an activist. I was in the streets of Paris in 1968. I was one of the pioneers of election monitoring in the Thai general elections of 1992, then again in '95 and '96. I also helped set up PollWatch [an international election-monitoring agency based in Bangkok]. We operated in the spirit of an NGO, but we were more combative. I was formerly with the Union for Civil Liberty as an adviser and with the Forum on Asian Regional Human Rights.

Q: You have been a university professor all that time?
A:
Having worked at the university, one always has lots of time to do other things. I more or less started the human-rights movement here. When I joined the Election Commission in 1997 after the new constitution, I had to quit my university job.

Q: In the March senatorial elections, 78 people were disqualified after the vote. How did you find out about election abuses?
A:
Even before Election Day people were crying foul. We have lots of sources of information: NGOs who monitor the election, provincial election commissioners, teams of investigators we send out to some provinces. And in this office, people telephone, fax, send letters, or even come in person. But we had no fixed idea beforehand of how many candidates and districts were involved.

Q: Then how did you decide whom to disqualify?
A:
Not only did we do some investigation, we also invited 108 candidates to testify before the commission directly. Thirty were declared senators, and 78 did not pass. Three could not stand [for] reelection. Now we have decided to sue the three in the civil case for damages the state has to spend on organizing reelection. They will automatically face criminal prosecution, too.

Q: Has your office felt any pressure?
A:
There have been some incidents of intimidation but no report of direct threats. We have to touch wood. But if somebody decides to use violence, that decision is irrational. I would like to make reasoning here: Suppose they use physical violence against us, it won't help them be reelected.

Q: How would you characterize Thai politics?
A:
You can use the words "money politics" or patronage, but the big picture obviously is that the system is nontransparent and is conducive to corrupt practices.

Q: Then did you think the first-ever senatorial elections were successful?
A:
I'm pleased with the turnout for elections of 72%. That means that more people are participating. I think we confirmed that the process of political reform is going on.

Q: You are holding a reelection. Is this enough?
A:
It's necessary but not sufficient...to have cleaner politics. The next step is to look for cleaner general elections and, in the long run, we need a sustained political education campaign because this is what I think is political sociology. But again, a political education campaign is necessary but insufficient. If our political system can deliver a sense of empowering people and result in a fairer distribution of resources, then the people will have the concept and the full stomachs. If you have a good concept with empty stomachs, it won't work.

It's not just to do with national politics but local politics. This money politics and patronage system is working now at the local level, even more intense -- and the local politics is more or less connected with the national politics. We have to explain the whole concept of empowerment and how local corruption is protected by the system. This is difficult...but we have no choice if we want to reform. But you have to do it, though it takes a lot of effort and time. And you have to have a positive view of human nature or you give up easily.

Q: How are political change and economic change linked?
A:
Political change has smaller time constraint, while economic and social change have a larger time span. To analyze the effect we need some time, but the decisive step will be for the general elections. Although the Senate election is a component of the reform, the crunch will be for the general election, it will have far reaching consequences on businesses, powers that be, on bureaucracy and so on.

Q: Will this make business more open?
A:
Corporate transparency is very connected to everything we are talking about. The problems faced by business is that they have to deal first with bureaucracy. Who decides? Who to ask for tea money?

Supposedly politicians are behind this. If we can empower people and have checks and balances which are independent and efficient, then politicians have to be careful, and bureaucracy has to be careful and not feel too sure of their protection, or not too fearful of retaliation if they decide to be honest.

Q: What political system of democracy do you think Thailand should emulate?
A:
In the past, the U.K. was the cradle of democracy. There were a lot of problems related to elections, then society evolved. But then you still cannot say that U.K. has rid of itself of corrupt practices related to politicians. Money politics in other forms still happens everywhere so I don't think we should try to emulate any model but should study those models and, more importantly, the social conditions that underline those models and think harder for ourselves.

Q: How does the income divide affect the possibility for more transparency and democracy?
A:
The income gap is an aggravating factor, but there are other factors, like the way we organize our social activity, which is more vertical than horizontal. It's very much conducive to the patronage system, and the technological driving force is what I think is one of the most important factors of our time.

Q: What about educating people about the evils of vote-buying.
A:
This is related [to what I do]. I spent my life in the education field, and this job is more or less education.




S.M. Krishna (int'l edition)

S.M. Krishna
Chief Minister,
Karnataka India
Dressed in a crisp Indian shirt in his unadorned office in Bangalore, Somanahalli M. Krishna, 69, the new Chief Minister of the southern state of Karnataka, has the quiet, unhurried manner of a South Indian aristocrat.

In fact, Krishna is a man in a hurry, and with a tough mission: to preserve Bangalore's standing as India's Silicon Valley. Fed up with the city's crumbling roads and chronic power and water shortages, high-tech companies weren't expanding their operations, nor were new ones eager to come to Bangalore, preferring neighboring Hyderabad. Krishna, the Congress Party's dark-horse candidate, sprang into action after being elected last October. ''I had to move on a war footing,'' says Krishna. ''There was despondency all over.''

He personally called technology company leaders, reassuring them that he would fix the problems. He repaved about 200 kilometers of Bangalore's potholed roads and pushed through funding for long-held-up projects, including the International Technology Park, in which the Singaporean government invested $5.5 million. Confidence in the real estate sector is returning.

For his rural constituents, Krishna has been instituting programs to increase crop yields. ''Agriculture is my main concern; a leader ignores it at his own peril,'' says Krishna, the scion of a land-owning farming family. He is currently negotiating a $250 million loan with the World Bank to rebuild 25,000 old water tanks and provide reliable irrigation to his arid state. He's helping to change India's gender-discriminatory practices, too: This year, Karnataka will become the first state in India to make schooling free for girls, while boys will continue to pay.

Krishna, who studied law at George Washington University as a Fulbright scholar, began as a legal academic. But he was inspired by family history to go into politics. His people are glad he did.



N. Chandrababu Naidu (int'l edition)

N. Chandrababu Naidu
N. Chandrababu Naidu
Chief Minister,
Andhra Pradesh India
N. Chandrababu Naidu is an unflinching proponent of technology and what it can do for a poor country like India. He is known as the ''Laptop Minister'' for his constant electronic companion.

In his five years running Andhra Pradesh, Naidu, 50, has used his decisiveness and drive to transform the state. Before he took office, it was ranked 22nd as a place to do business by a newsmagazine poll; it's third today. Naidu has tripled the number of engineering colleges and increased telephone lines from 600,000 in 1995 to 2.2 million now. Naidu also lobbied U.S. diplomats to persuade President Clinton to visit in March.

With such moves, he's attracting investors. Foreign investment reached $19 million by the first quarter of this year, up $16.7 million in the past 12 months. And last year, the Wharton-Kellogg Indian School of Business picked Hyderabad to set up shop. With Naidu in charge, there'll be plenty more investors to come.



Perfecto Yasay (int'l edition)

Perfecto Yasay
Ex-Chairman,
Securities & Exchange Commission
Philippines
Just before stepping down as the Philippines' top market regulator in March, Perfecto Yasay made a choice. Rather than slip away quietly to take a sabbatical before resuming his law practice, he decided to bring an insidious scandal to worldwide attention. It involved the alleged stock-price fixing of a company controlled by a pal of President Joseph Estrada. The exchange's entire compliance team resigned to protest a presidential attempt to whitewash its investigation. Yasay tried to close the unpoliced exchange, but under presidential pressure, the markets stayed open. Nonetheless, Yasay became a public hero for standing up to Estrada, who threatened to charge him with ''economic sabotage'' but didn't follow through. ''I'm committed to reform,'' declares Yasay, 53, who back in the 1980s worked on a New York radio show offering legal advice to Filipinos who fled the Marcos regime. Manila needs more regulators like him.





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 + A Chat with Gothom Arya
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