In the Republic of Korea (South Korea), top executives of securities and aviation companies have been arrested on suspicion of illegal trading and tax evasion.

　In China and Vietnam, bribery and smuggling in high places are so common that the arrests of Communist Party officials on these charges are no big news.

　In Japan, too, corporate heads who apparently lack the slightest sense of business ethics have been arrested. A recent example is the financial scandal involving Cresvale Securities.

　Asia is said to be recovering from its economic crisis. But the rash of corruption cases in the region is evidence that it is suffering a serious erosion of morality.

　True confidence in Asia will not develop unless the basic fabric of economic society is strengthened. To prevent the recurrence of crises, Asian nations must stamp out corruption.

　In this regard, Indonesia's experience provides useful lessons.

　During the Suharto administration, the president's family and business cronies pocketed tax money and donations. The bureaucracy and the ruling party were entrenched in this structure of corruption.

　Thus the Suharto establishment created a big hole in public finances and sapped the economy of its vitality. In other words, it exploited its own country. Japanese companies operating there were trapped in this structure.

　Economists called Indonesia a "high-cost economy.'' The cost of building a power station or a petrochemical plant, for instance, was higher than the international norm because the project cost included kickbacks to the government.

　To cure this, Indonesia first introduced policies aimed at liberalizing trade, investment and financial services, and removing government regulations.

　The idea was to create competitive markets and encourage growth led by private demand. In the works were plans to break up business monopolies and privatize state-owned enterprises.

　The World Bank, the International Monetary Fund and reformers in Indonesia hoped that these measures would rein in the autocratic president and sever the cozy ties between the government and business.

　After the fall of the Suharto regime, new players appeared on the stage to watch out for corruption: citizens armed with financial and legal expertise, and nongovernmental organizations.

　"We received more than 1,000 tips from whistle-blowers in a year and half after our group started,'' said Yoke Octarina, a researcher at Indonesia Corruption Watch, an NGO based in Jakarta. "During Suharto's days, people had no choice but to follow the corruption-tainted regime. Not anymore. Now we also get tips from sympathizers inside the government and banks.''

　Last June, the news media reported that a large amount of money had been paid into the bank account of a relative of the prosecutor-general running the investigation into the Suharto family's alleged financial wrongdoing. In late July it was also reported that a central bank loan had been funneled to the ruling Golkar Party prior to the presidential election. Both reports followed complaints filed by citizens and NGOs.

　The downside to liberalization and deregulation is that such measures make it easier for government leaders and bureaucrats to create legal loopholes. Complaints from vigilant citizens can play a major role in preventing such wrongdoing in high places.

　The World Bank recently asked NGOs to conduct follow-up checks to find out how its loans to the Indonesian government had been used. The request is proof that the bank values such citizen activities.

　Of course, rooting out corruption requires establishing a system for ferreting out bribery and other wrongdoing and enhancing governance. Asian governments should promptly take the following steps:

(1) Strengthen efforts to investigate wrongdoing and enforce rigorous audits.

(2) Review the civil service system to cut the number of public employees rather than raise wages.

(3) Enact bankruptcy legislation and ensure the execution of court rulings to protect claims on failed businesses.

　All these measures would improve the ability of governments to clean up their act.

　Private corporations are also required to maintain high standards of ethics and discipline. That is why Indonesia's Wahid administration, which is promoting bank consolidation and reconstruction, is pushing for the introduction of international accounting and audit rules.

　Liberalization should be stepped up lest these efforts fizzle out. It is also essential to use various other approaches to force action, such as pressure from citizens and advice from the international community.

　The grim realities faced by Indonesia have no small bearing on China and other Asian nations also beset by conditions contributing to corruption, such as money-worship and cronyism. The fundamental solution hinges on the system of government a country chooses−dictatorship or democracy.

　Eliminating corruption and reviving morality are also big challenges for Japan, although it is a step ahead in efforts to build anti-corruption systems. Japan's support for the rest of Asia will become more fruitful if the nation takes the initiative for reform.