Can a Commissioner Be Independent If They Owe Their Seat to Someone Else?
Recent commissioner appointments have reignited questions about corporate governance, independence and political influence in Indonesia's largest companies.
Every so often, a story comes along that is interesting not because of the people involved, but because of the powers it exposes.
Indonesia has had one of those moments.
In recent weeks, public attention has settled on two commissioner appointments that, taken individually, might have been dismissed as little more than another day’s political theatre. One involved the appointment of a 27-year-old to the Board of Commissioners of a subsidiary within the Pertamina group, despite widespread public questioning over what relevant corporate governance experience they brought to the role. The other concerned the appointment of the former personal assistant to Raffi Ahmad, to the Board of Commissioners of Krakatau POSCO, the joint venture between state-owned Krakatau Steel and South Korean steel giant POSCO.
The names themselves are incidental.
Dwelling too heavily on the individuals misses the point.
They may well prove diligent.
They may possess qualities invisible to the public.
They may surprise everyone and become excellent commissioners.
One should always leave room for that possibility.
However, the issue is whether their appointment inspires confidence that they already possess the experience, judgment and independence expected of someone entrusted with supervising the leadership of organisations whose decisions affect millions of people, billions of rupiah and, in the case of state-owned enterprises, assets that ultimately belong to the public.
Those are rather different standards.
The predictable explanation, of course, arrived almost immediately.
Politics.
Loyalty.
Relationships.
Representation.
Indonesia has always worked this way. Some shrugged, while others argued that commissioner appointments have long served purposes extending beyond corporate governance, functioning as rewards, symbols of trust or mechanisms for maintaining political relationships.
But that explanation begins to unravel the moment one asks an awkwardly simple question.
Why does loyalty require inexperience?
These are not mutually exclusive characteristics. Indonesia is hardly suffering from a shortage of competent people who are also politically aligned. It possesses:
Retired executives who have managed companies larger than some provinces.
Former regulators who understand governance frameworks inside out.
Academics who have spent entire careers studying risk, finance and public administration.
Career civil servants who have navigated ministries longer than some recent appointees have been alive.
If political trust is the objective, surely the pool of trustworthy candidates extends rather further than those whose principal qualification appears, at least from the outside, to be proximity to power.
Once one accepts the proposition that commissioner appointments should primarily reflect political loyalty, an awkward possibility begins to emerge.
Perhaps competence becomes inconvenient once it reaches the point where it produces something infinitely more troublesome.
Independence.
That, after all, is the characteristic of genuinely experienced people.
They develop opinions.
They accumulate reputations that exist independently of the minister or the influential figure who appointed them.
They become accustomed to disagreeing with people more powerful than themselves.
They acquire the deeply irritating habit of asking questions.
In other words, they begin exhibiting precisely the qualities one might hope to find in someone responsible for supervising management.
Which raises an even more unsettling thought.
What if the controversy surrounding these appointments is not really about youth, or celebrity, or politics at all?
What if it is about the gradual redefinition of the commissioner role itself?
Because if commissioners cease to be independent supervisors and instead become extensions of the networks responsible for appointing them, then corporate governance has stopped being a mechanism for holding power accountable and started becoming another way in which power distributes itself.
What Is a Commissioner Actually For?
Indonesia’s corporate governance framework follows the Dutch two-tier board model, which deliberately separates those who manage a company from those who supervise its management.
The Board of Directors runs the business. They negotiate contracts, formulate strategy, oversee operations and attempt to create value for shareholders. If the company were a ship, these are the people on the bridge deciding where to sail.
The Board of Commissioners performs a different function. It is not there to steer the ship. It is there to stand behind the captain, making sure that everyone has looked at the map before announcing full speed ahead.
Commissioners exist to manage the managers.
Corporate governance has always been built upon a rather pessimistic assumption about human nature. Left entirely to themselves:
Executives may become overconfident.
Success has an unfortunate tendency to convince intelligent people that they have become infallible.
Financial forecasts become optimistic.
Before long, someone is proposing a multi-trillion-rupiah investment supported by a hundred-page report explaining why every conceivable outcome appears favourable.
This is precisely the moment commissioners are supposed to earn their keep.
Imagine sitting around the board table at a major state-owned enterprise.
Management has just unveiled an ambitious expansion strategy.
The Chief Executive speaks confidently about growth opportunities.
The Chief Financial Officer reassures everyone that the numbers have been carefully modelled.
External advisers, who have been compensated handsomely for their expertise, confirm that the proposal is both visionary and entirely achievable.
Someone, eventually, is expected to ask the question nobody else particularly wishes to hear.
“What if we’re wrong?”
This is why commissioners around the world tend to be experienced. They are often former senior executives or industry specialists whose greatest asset is not technical brilliance but the confidence to challenge management when challenge is warranted.
Oversight, by its very nature, is not designed to be popular.
Loyalty Has Its Limits
At this point, the conversation usually reaches what has become the universally accepted full stop to almost every discussion about appointments in Indonesia.
“Yes, but politics.”
The phrase is presented though it were the explanation. Politics happens. Patronage exists. Relationships matter. End of discussion.
Except it isn’t.
If political loyalty really is an important consideration, why should that automatically result in appointments which sit some distance from conventional expectations of governance experience? Why does the conversation assume an impossible choice between loyalty and competence?
Indonesia is not a country lacking experienced professionals. Many have spent decades navigating the intersection between politics, government and commerce. Many would almost certainly satisfy any reasonable definition of political reliability while also bringing the kind of judgment that tends to emerge after thirty years of making decisions whose consequences extended further than social media.
Competence and loyalty are not opposing forces.
Which makes it difficult to avoid the suspicion that something else is being optimised.
On one side of the table sits a retired chief executive who has spent four decades overseeing complex organisations, surviving financial crises and explaining unpopular decisions to impatient shareholders.
On the other sits someone whose principal asset is that everyone already knows exactly who recommended them.
The Value of Independence
There is, however, another explanation.
Suppose the objective is not just appointing loyal people.
Suppose the objective is appointing people who remain dependent.
Someone who has spent thirty years building a career develops a reputation that belongs to them rather than to the individual who appointed them.
They accumulate networks beyond a single political circle.
They become financially secure.
They become accustomed to saying things that powerful people occasionally dislike hearing.
Corporate governance relies upon these qualities.
The ideal commissioner is not someone who agrees with management. They are expected to introduce constructive friction into an environment naturally inclined towards consensus. Their value lies in possessing sufficient confidence to interrupt a beautifully rehearsed presentation with the unfashionable observation that the risks are understated and the projected returns dependent upon everything going exactly according to plan.
That becomes considerably harder if one’s own position depends upon remaining agreeable.
If an appointment leaves investors, employees or the public asking whether the commissioner possesses sufficient experience to challenge management effectively, then confidence has already begun eroding before the first board meeting has even commenced.
Perhaps this explains why institutional investors devote such extraordinary attention to board independence. Their interest has little to do with personalities. They understand something rather fundamental: executives already have people paid to support them.
The commissioner is supposed to be the person paid to question them.
Who Are Commissioners Really Working For?
If the owner of a privately held business wishes to appoint their cousin, golfing partner or the neighbour’s Labrador as commissioner, the consequences remain largely their own. Investors possess a mechanism for expressing disagreement with private governance decisions.
They decline to invest.
Public companies operate under a different social contract.
Suddenly the shareholders include pension funds investing retirement savings, institutional investors managing other people’s capital and ordinary citizens whose exposure may extend no further than a mutual fund holding shares on their behalf. Decisions made within the boardroom ripple well beyond those seated around the table.
State-owned enterprises extend this principle even further.
Here, the ultimate shareholder is the public.
Taxpayers may never attend an annual general meeting. They will almost certainly never meet the board. Yet they remain the residual owners of institutions whose success, failure and governance ultimately affect national finances, public confidence and economic development.
Commissioner appointments cease being purely internal staffing decisions and become matters of legitimate public interest.
In many mature corporate governance systems, politics may influence who enters the room, but demonstrated experience usually determines the credibility of the appointment. Former ministers, regulators, and business leaders often carry political histories. They also arrive with careers capable of surviving independent scrutiny.
This is why unusual commissioner appointments generate such disproportionate attention.
Every appointment communicates something about the values of the institution making it. It indicates what characteristics are considered important, what trade-offs are acceptable and what the organisation believes the role itself actually requires.
If commissioner positions gradually come to resemble rewards for proximity rather than appointments earned through demonstrated judgment, people stop assuming commissioners exist to supervise power.
When Institutions Lose Credibility
Organisations have always survived disappointing appointments. Equally, history is littered with people who exceeded every expectation placed upon them. Human beings are unpredictable, which is why one should be cautious about reducing any debate to a judgment upon a single person.
The larger concern lies elsewhere.
Institutions derive their strength from the confidence that the powers granted to them will be exercised in the manner society understands them to exist.
A Supreme Court functions because citizens broadly accept that judges are expected to interpret the law rather than the political preferences of whoever happened to appoint them.
Central banks are trusted because markets believe interest rates are set according to economic judgment rather than whoever had the most vociferous opinion over lunch.
Auditors retain their credibility because investors assume they are inspecting the books rather than composing thank-you letters to management.
Commissioners belong to precisely the same category.
Corporate governance is, in many respects, rather like an aircraft’s emergency systems. One hopes they are never required. Yet nobody boards a plane thinking, “The emergency exits seem a little decorative, but I’m sure we’ll improvise if anything happens.” Confidence comes from believing that someone has thought carefully about what would happen if a disaster occurred.
Boardrooms are no different.
The commissioner exists for the extraordinary Tuesday afternoon when consensus has become dangerous, optimism has become contagious and someone must possess the confidence and the authority to interrupt the proceedings with a sentence beginning, “Before we approve this...”
If commissioner appointments increasingly appear to reward proximity rather than judgment, the public inevitably begins adjusting its assumptions.
Investors become more sceptical.
Employees become more cynical.
Minority shareholders begin wondering who exactly is representing their interests.
Even capable commissioners appointed entirely on merit find themselves working beneath a cloud created by appointments elsewhere.
Institutional legitimacy is surprisingly fragile in this respect.
Perhaps this explains why so many annual reports devote pages to celebrating principles such as accountability, transparency, independence and Good Corporate Governance. They are promises. Public declarations about how an organisation understands its own responsibilities.
Those words matter.
At least they ought to.
It would be unfair to suggest that every unconventional commissioner appointment represents institutional decline. Some will undoubtedly perform exceptionally well. Others will develop into thoughtful, diligent and genuinely independent board members despite scepticism surrounding their appointments. Every organisation benefits when its leaders exceed expectations.
Yet that possibility cannot become a substitute for principle.
Good governance exists precisely because institutions should not rely upon optimism, goodwill or the assumption that everything will probably work out in the end. It relies upon structures deliberately designed to make poor decisions less likely and difficult questions more common.
That is why the commissioner matters.
They are, in effect, the people responsible for managing the managers.
Once that role begins drifting towards managing relationships instead, something fundamental changes.
The more experienced an individual becomes, the more likely they are to possess exactly the qualities that effective oversight requires. Those qualities make them rather more difficult to influence, less dependent upon political patrons and more inclined to ask questions.
Which brings us back to those recent appointments.
The individuals became symbols of a larger conversation about what Indonesia expects from the institutions responsible for governing some of its most important companies.
If commissioner appointments genuinely reflect the careful selection of individuals best equipped to supervise management, then the public should be able to see that logic without requiring lengthy explanations about political realities, unwritten customs or the mysterious ways in which things are supposedly done.
And if the explanation ultimately becomes, “Well, this is simply how the system works,” then perhaps the system deserves rather more scrutiny than the individuals passing through it.
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