Pertamina lost $4.69b, Bulog $840m: Auditors<\/p>\n
JAKARTA (JP): Independent auditors have found losses amounting
\nto US$4.69 billion at state oil and gas firm Pertamina and Rp 6.7
\ntrillion ($840 million at the current rate) at the State
\nLogistics Agency (Bulog).<\/p>\n
Minister of Finance Bambang Subianto said on Monday that
\nPertamina's losses, which were found by PricewaterhouseCoopers
\n(PwC) for the period from April 1996 to March 1998, were caused
\nby inefficiency, loss of income opportunities and future
\nobligations.<\/p>\n
Bambang added that auditor Arthur Andersen determined Bulog's
\nlosses for the period spanning April 1993 to March 1998 and
\nattributed them to unfavorable business contracts, irregularities
\nand weak supervision.<\/p>\n
He said that various factors -- including unfavorable
\nregulations, protracted bureaucratic procedures and outside
\nintervention -- caused Pertamina to be unable to operate as an
\nefficient, profit-oriented firm.<\/p>\n
\"Various parties that have key positions or strong influence
\nplayed an active role in getting contracts or business
\ncooperation from Pertamina,\" he told a news conference announcing
\nthe results of the audits.<\/p>\n
Bambang said PwC did not identify by name the influential
\nparties or people because the audit was primarily aimed at
\nfinding ways of improving the efficiency and profitability of
\nPertamina.<\/p>\n
Analysts and legislators have often alleged that Pertamina was
\na cash cow for the family and associates of Soeharto during his
\n32-year presidency which ended in May 1998.<\/p>\n
Bambang said in a statement that $2 billion of Pertamina
\nlosses were caused by inefficiency, between $1.27 billion and
\n$1.97 billion by lost income opportunities and $721 million by
\nfuture obligations.<\/p>\n
Results of the special audits of Pertamina, Bulog and the
\nstate electricity company PLN, made under an agreement with the
\nInternational Monetary Fund (IMF), were originally scheduled to
\nbe announced at the end of August. The audit of PLN has yet to be
\ncompleted.<\/p>\n
The delay raised concerns that the government was trying to
\nmanipulate the results of the audits. A provisional PwC audit
\nreport leaked to the media in June showed that Pertamina suffered
\ncombined losses of up to $6.1 billion.<\/p>\n
Bambang dismissed speculation of a cover-up, saying the
\ndiscrepancies with the initial leaked report were due to
\ndifferent assumptions used in the final audit, including varying
\nexchange rate assumptions.<\/p>\n
He said the government would not disclose the full reports as
\nagreed with the IMF and hinted that the conclusions of the audit
\nwould not have any legal consequences.<\/p>\n
Pertamina president Martiono Hadianto responded angrily when
\nasked if Pertamina would be transparent about releasing details
\nof the full report.<\/p>\n
\"Do I have to? If you had the report, what would you intend to
\ndo about it?<\/p>\n
\"Transparency could be made through other means.\"<\/p>\n
PwC began the Pertamina efficiency audit on Jan. 11 and
\ncompleted it on July 11. The audit covered the period April 1,
\n1996, to March 31, 1998.<\/p>\n
The international auditor concluded that Pertamina suffered
\nsome $2 billion in losses due to inefficiency during the period
\nbecause it failed to operate according to international business
\nbenchmarks.<\/p>\n
PwC also said that Pertamina could gain between $1.27 billion
\nto $1.97 billion in additional operating income in the future
\nthrough savings and value creation opportunities.<\/p>\n
The company may also have to pay some $721 million in future
\nobligations because of past contracts which were not entered into
\nits financial books, PwC added.<\/p>\n
PwC said the largest portion of the inefficiency losses
\namounting to $1.67 billion was due to foreign exchange losses
\nbecause the company did not hedge its overseas debts.<\/p>\n
The auditor said $116 million of the inefficiency losses were
\ncaused by the unusually high insurance premium paid by
\nPertamina's foreign contractors to insurance firm PT Tugu
\nPratama.<\/p>\n
Tugu Pratama, which for decades monopolized the country's oil
\nand gas insurance market, was controlled by Mohamad \"Bob\" Hasan,
\na close associate of Soeharto.<\/p>\n
PwC said Pertamina lost $34 million in selling lubricants and
\noil solvents at prices lower than the market level and another
\n$90 million from shipping contracts which charged prices higher
\nthan the market level.<\/p>\n
Bulog, which held the monopoly in importing and distributing
\nessential basic commodities including rice, sugar and wheat until
\n1998, was found to have provided lucrative business contracts to
\nthe family and associates of Soeharto.<\/p>\n
The government, on the instructions of the IMF, abolished most
\nof Bulog's monopolies last year.<\/p>\n
Bambang said Bulog lost Rp 2.1 trillion in dubious procurement
\ncontracts which charged prices much higher than the market level.<\/p>\n
Bambang added that Arthur Andersen's audit report on PLN
\nwould be completed later this month. (rei)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/pertamina-lost-469b-bulog-840m-auditors-1447893297",
"image": ""
},
"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
}