AGO to help curb corruption at SOEs

AGO to help curb corruption at SOEs

The Jakarta Post, Jakarta

The Office of the State Minister of State Enterprises and the
Attorney General's Office are joining forces to fight corruption
at state-owned enterprises (SOEs).

State Minister of State Enterprises Laksamana Sukardi and
Attorney General MA Rachman signed a memorandum of understanding
on Friday pledging a wide-range of cooperation to ensure SOEs are
run "professionally".

"In the area of criminal law, the Attorney General's Office
will provide information (to the Office of the State Minister of
State Enterprises) on actions that appear to be causing losses to
the SOEs...," Laksamana's office said in a statement issued
after the memorandum of understanding was signed.

The statement added that once there was sufficient evidence a
crime had taken place, the Attorney General's Office would take
the necessary measures.

Indonesia has some 150 state-owned enterprises, most of which
are inefficient, loss-making operations.

Many observers have called the enterprises cash cows for
politicians and corrupt bureaucrats, particularly during the rule
of former president Soeharto.

According to independent audits published late last year, five
large SOEs suffered a combined US$4 billion worth of
inefficiencies, potential losses and lost savings from 1995 to
1999.

The five companies are flagship carrier Garuda Indonesia,
domestic telecommunications firm PT Telkom, toll road operator PT
Jasa Marga, port operator PT Pelabuhan Indonesia II and palm oil
plantation firm PT Perkebunan Nusantara IV.

The audits were completed as part of an agreement with the
International Monetary Fund, which is providing a multibillion
dollar rescue package for the country.

Most observers also believe that corruption is a major problem
at most state banks. The government injected about Rp 430
trillion ($43 billion) worth of bonds to bail out domestic banks
in the late 1990s, and more than half of that amount went to
state banks.

The injection of the bonds was necessary to replace the huge
amount of bad loans that had to be transferred to the Indonesian
Bank Restructuring Agency to be restructured.

Many analysts have said the huge amount of bad loans at state
banks was largely the result of corruption.

The government's privatization program is also part of the
effort to boost good corporate governance and curb corruption at
state-owned enterprises.

But the privatization program has been challenged by a number
of parties, including lawmakers and workers. Some experts believe
many of the protests against the program have been sponsored by
vested interest groups.