Our planet is warming at a faster rate than it ever has, as a result of a high concentration of heat- trapping gases in the atmosphere. The burning of fossil fuels is the number one cause of global warming. The second is deforestation. Trees absorb carbon dioxide and retain it for as long as they live. Cutting down trees means that carbon is released back into the atmosphere.

REDD+ (Reducing Emissions from Deforestation and Forest Degradation) is a UN-initiated scheme that aims to reduce the contribution that deforestation is making to climate change, essentially by paying tropical forest-rich countries not to cut down trees. There are two main ways in which this can happen. The first is fund-based - those who conserve forests receive money, as compensation for not exploiting them. The second is mechanism-based - the carbon that is stored in forests is represented by carbon credits which are sold on carbon markets. People or organisations that want to reduce their emissions impact can do so by purchasing REDD+ credits. The intention is that proceeds from these sales should further finance forest conservation, shared between national and local governments, investors and forest-dwelling communities.

Indonesia presides over some 130 million hectares of forest, which amounts to 68 per cent of its land coverage - the third largest area of tropical rainforest in the world. Deforestation rates are extremely high, however, currently estimated at 1.17 million hectares per year.2 This makes Indonesia a high priority country under REDD+.3 Estimates show that lowering the deforestation rate by 5 per cent could generate REDD+ payments of US$ 765 million annually, and cutting it by 30 per cent could amount to US$ 4.5 billion each year.

In 2009 Indonesia entered what is known as a ‘REDD+-readiness’ phase. International donors have so far provided approximately US$ 4.4 billion for the development of the policy, institutional and technical infrastructure necessary for a functioning REDD+ system.5 In 2010 the national REDD+ Task Force was created by presidential decree, mandated with the completion of a national REDD+ strategy, and the establishment of a REDD+ agency, financing mechanisms, and carbon accounting institutions.6 In September 2013 a subsequent decree was signed to establish the REDD+ Agency - to assist with planning, managing and monitoring REDD+ activities in Indonesia. Once the agency enters into operation a second phase of performance-based REDD+ funding from Norway will get underway. This will pave the way for the creation of a funding instrument for REDD+ in Indonesia (FREDDI).

As funding increases and readiness actions continue, the question remains as to whether sufficient care is being taken to insulate REDD+ against corruption. Indonesia scored a poor 32 on Transparency International’s (TI) 2012 Corruption Perceptions Index, which ranks countries on a scale of 0 (highly corrupt) to 100 (very clean) according to how corrupt their public sector is perceived to be.7 The country’s forestry sector has a particularly poor reputation for illegal activities and corruption, with estimated annual loses of US$ 36 billion from the national economy through fraud, tax avoidance and embezzlement.8 Given the potentially significant flows of money involved, these trends suggest significant threats to the success of REDD+ should effective anti-corruption safeguards not be built in now.

TI Indonesia (TII) is working to ensure that this happens. It is advocating for forestry-related agencies to adhere to high standards of transparency and accountability, and to enable civil society to effectively monitor the integrity of REDD+ mechanisms. Under these conditions, TII believes that REDD+ payments will be far more likely to meet their intended objectives.

To guide its advocacy efforts, TII undertook a corruption risk assessment for REDD+. This was not an assessment of concrete corruption cases, but focussed on diagnosing risks so that they might be proactively addressed. To compliment existing work carried out by CIFOR and the UN REDD Programme,9 the assessment focused on activities at the local level in the three provinces of Riau, Aceh and Papua. It embraced a participatory approach, providing opportunities for stakeholder input and engagement throughout.

This document sets out a summary of the main findings of this analysis. It first introduces the methodology, followed by a summary of the main findings of the analysis, and a series of conclusions and recommendations for reform.