BPK finds over $260m in losses

BPK finds over $260m in losses

JAKARTA (JP): The Supreme Audit Agency (BPK) has discovered
cases involving more than Rp 600 billion (US$260.7 million) in
financial losses caused by government overspending, overpriced
projects, unpaid taxes and bad loans at banks owned by provincial
administrations.

The agency's chairman, J.B. Sumarlin, reported the findings to
members of the House of Representatives yesterday after
submitting the agency's audit results for the first semester
(April-September) of the 1995/1996 fiscal year.

During his speech yesterday, Sumarlin identified a number of
cases uncovered by his agency, but did not mention the exact
total sum of financial losses incurred.

Under Indonesia's constitution, the Supreme Audit Agency is
required to report its audit findings to the House of
Representatives. The reports are presented every six months.

Sumarlin said yesterday that for the first semester, the
agency audited 103 items related to the state budget; 50 related
to local administrations' budgets; 34 related to state-owned
companies; 24 related to local administration-run firms; and five
related to government losses.

Among the financial losses discovered by the agency were Rp
33.23 billion in unpaid penalties from tax evasions; Rp 2.65
billion in diverted funds originally intended for managing
Indonesian workers abroad; Rp 31.36 billion and US$127,000 in
overspending caused by overvalued and overpaid contracts in 12
irrigation projects and eight airport development projects; and
Rp 59.3 billion and 5.76 million French francs in inefficient use
of infrastructure facilities -- including irrigation networks and
rice fields -- built during the 1994/1995 fiscal year.

The agency also detected up to Rp 11.94 billion in unpaid
motorized-vehicle levies in eight provinces; Rp 30.59 billion in
unpaid water bills and royalties on copper mines in five
provinces; and Rp 12.74 billion in unfeasible plantation
projects.

Sumarlin said the agency also uncovered financial losses of up
to Rp 344.08 billion at banks owned by provincial administrations
incurred by problem and bad loans during the 1993-1995 period;
and Rp 96.89 billion at 10 local offices of the state-owned water
utility companies, resulting from excessive water leaks.

"These findings only have a meaning when the agency's
recommendations are fully implemented by both the government and
legislators," Sumarlin told reporters.

He said that due to the agency's limited personnel, the items
selected for auditing were only the most strategic ones, which
had the largest effect on people.

Last year, the agency discovered government losses of up to Rp
11.1 billion resulting from fraud at six government institutions
during the April-September period of 1994.

Sumarlin said that beginning this year, his agency will start
conducting a general audit on state-owned enterprises and give an
opinion on their performances.

As a start, two firms will be audited, he said. He refused to
disclose the names of the firms.

Meanwhile, during a speech yesterday, Speaker of the House of
Representatives Wahono slashed out at the country's low economic
efficiency, which has caused the current account deficit and
inflation rate to exceed the target stipulated for the present
Sixth Five-Year Development Plan period.

Indonesia's current account deficit for the 1996/1997 fiscal
year is projected at US$8.7 billion, with an inflation rate of
more than 5 percent.

"Efforts to eliminate the abusive use of power, excessive
spending and leaks in government budgets ... require serious law
enforcement," he said.

"Collusion, which disregards feelings of shame, has shown its
face in many events we have recently witnessed. Double leaks --
in the form of classic corruption and sophisticated corruption,
which take advantage of loopholes within the law and the low
integrity of government officials and irresponsible businessmen
-- have severely undermined our macroeconomic endurance," Wahono
said.

He warned that an overheated economy could cause a sudden,
uncontrollable collapse, "such as has been experienced by many
developing nations".

He said that the state's financial situation reflected the
responsibility and accountability of those running the country.

"The people's money must return with double its value and must
not be absorbed by the unproductive greed of cosmopolitan
groups," he said.

"(The occurrence of) leaks and waste is not only a matter of
organization and management. It goes deeper into the roots of
moral decadence. It is our responsibility to history to stop it,"
Wahono added. (pwn)