By Sunanda Creagh and Telly Nathalia
JAKARTA, May 6 (Reuters) - A scandal involving Indonesia's top graft-buster is unlikely to have a long-lasting impact on the president's political fortunes or his anti-corruption agency as both responded quickly, stressing that no one was above the law.
Under President Susilo Bambang Yudhoyono, who is seeking re-election in July, Indonesia has made progress in tackling endemic graft. But it still ranks among the most corrupt places in the world, particularly in the civil service, judiciary, police and parliament, deterring much-needed investment. This week, police detained Antasari Azhar, the head of the powerful Corruption Eradication Commission (KPK), as one of several suspects in the mafia-style murder of a businessman.
So far, no political links to the scandal have emerged, but cannot be ruled out, some analysts said. Azhar himself was appointed by a panel of party representatives, while other suspects detained by police include a politically connected publisher and a senior police official.
Both President Yudhoyono and the KPK quickly distanced themselves from Azhar when he was named a suspect. The KPK put Azhar on temporary leave and transferred his work to his four deputies. Yudhoyono's spokesman stressed "the law is enforced without exception."
"Indonesia is trying desperately to get control over the corruption problem," said Jeffrey Winters, an expert in Indonesian politics from Northwestern University in Chicago.
"To have the lead figure in that process arrested in a case like this is definitely a setback," he said, adding that members of parliament with a vested interest in shutting down the KPK will be eager to capitalise on the scandal.
The KPK has already investigated several members of the notoriously corrupt parliament, and parliamentarians have also delayed approval for the corruption court -- considered relatively independent, and another key plank in Yudhoyono's anti-graft campaign -- to continue.
LOW-HANGING FRUIT
Anti-corruption campaigners said the KPK should be able to pursue its investigations without Azhar thanks to its teams of investigators and undercover staff.
"This is a personal problem" for Azhar, said Teten Masduki, secretary general of Transparency International in Indonesia.
"I met leaders of the KPK (on Monday) and they have plans in the near future to speed up the legal process for corruption cases. If these big cases can be brought to court in the near future, maybe any doubts arising from Antasari will be erased."
Set up in 2003, the KPK has taken on scores of corrupt officials including central bankers, business executives, and prosecutors in the attorney-general's office, exposing a system of kickbacks and mark-ups used to award government contracts, and influence decisions by parliament and regulators.
Journalists and TV crews wait outside its offices for suspects to be brought in for questioning, producing an almost daily diet of stories on widespread bribery and malpractice.
Following the KPK's investigations, former central bank governor Burhanuddin Abdullah and other central bankers were jailed over illegal payments to members of parliament. Another former Bank Indonesia official, Aulia Pohan, whose daughter is married to President Yudhoyono's eldest son, is among those charged with making payments to MPs.
Still, some say the agency could be even tougher and go after more senior figures.
"The KPK tends to pick the low-hanging fruit," said Kevin Evans from Pemilu Asia. "My view is that they have more cases than anyone can ever possibly achieve, so they have to pick the ones they can."
POWERFUL FIGURES
Any criticism tends to centre on the fact that some powerful figures have escaped the KPK's attention, including past and present ministers, and wealthy tycoons.
Last August, a member of parliament told the KPK that he and others had received money after Miranda Goeltom, a senior central banker, was elected.
Goeltom has denied any knowledge of the matter, and the KPK has not reported any progress on the matter.
"The weaknesses are that the KPK is yet to pursue suspects at the next highest rung of power and influence, namely active ministers and senior political party figures. They prosecute lower level parliamentarians," said Kevin O'Rourke, a Jakarta-based political risk analyst.
Still, an open, transparent investigation into a powerful figure like Azhar could even enhance Yudhoyono's credentials when it comes to law enforcement, O'Rourke said.
Politicians, activists and even one of Indonesia's best-known rock bands, Slank, have urged the KPK to continue its work while the Azhar case continues. Analysts say the agency's decision to put Azhar on temporary leave as soon as he became a suspect may help inspire public confidence.
"There's been no attempt, for the first time I can think of, by someone under the spotlight to hide behind the institution they work in," Evans said.
"The principle that a person in that situation should not continue to occupy a position at the institution is taking hold in Indonesia. The integrity systems inside the KPK seem to be working. The great thing is that people are rallying around the institution, not the individual." (Editing by Sara Webb and Bill Tarrant)