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)