BPKP lists BP Migas among top abusers

BPKP lists BP Migas among top abusers

Rendi A. Witular, The Jakarta Post, Jakarta

The Development Finance Comptroller (BPKP) has again
discovered massive financial irregularities in the Oil and Gas
Implementing Body (BP Migas) this year.

During a hearing with the House of Representatives' finance
commission on Thursday, BPKP chairman Arie Soelendro
said the agency had found irregularities in the use of state
funds worth Rp 1.32 trillion (US$146 million) in the first nine
month of this year.

Arie said the financial irregularities discovered at BP Migas
amounted to Rp 1.11 trillion, or some 84 percent of total
irregularities.

"BP Migas is responsible for the largest portion of the
irregularities with 416 cases in the first nine months ending
September this year," said Arie, while refusing to spell out the
type of irregularities found at the agency.

Both the BPKP and BP Migas are accountable to the President.
BP Migas' head, Rachmat Sudibyo, could not be reached for
comment.

"Irregularity" in BPKP terminology does not necessarily mean
"corruption". Aside from the misuse of funds, it can also refer
to improper accounting.

Earlier, the BPKP said it had found 61 financial
irregularities worth Rp 967 billion in the agency during the
first quarter of last year.

BP Migas later clarified this by saying that this figure
referred to cumulative irregularities involving oil and gas
contractors in the country between 1995 and 2001. During this
period, oversight in respect of oil and gas contractors was
carried out by state oil and gas firm PT Pertamina.

BP Migas, which has taken over Pertamina's duties in
overseeing the country's upstream oil and gas industry, was set
up in mid 2003.

The second highest number of irregularities in the January-
September period was found in Pertamina with 202 cases involving
Rp 89.33 billion, followed by departmental and non-departmental
institutions with 7,015 cases worth Rp 80.94 billion. State
enterprises, other than Pertamina, accounted for 535 cases
involving Rp 17.45 billion.

Arie said only 2,280 cases worth Rp 420 billion, or 31 percent
of the total value of the irregularities in the first nine months
of this year had been "followed up".

Following up means that the public prosecution service or the
police takes action against the agencies, institutions or
companies where the financial irregularities have been found
after receiving a report from the BPKP.

During the hearing, Arie also expressed concern over the fact
that there was still Rp 512.83 billion, $8.71 million and DM
765,287 in non-budgetary funds that had yet to transferred to the
state budget.

Non-budgetary, or off-balance-sheet funds, are basically
revenues other than revenues from tax collected by state
institutions, but are not included in the state budget. In the
past, these huge funds were a source of corruption and were
allegedly used to finance the 32-year authoritarian rule of
former president Soeharto.

The government issued a regulation in 2000 requiring state
institutions to transfer all off-balance-sheet funds to the
budget. However, a number of state institutions, such as the
Directorate General of Taxation, the Directorate General of
Customs and Excise and the Office of the State Minister for State
Enterprises, are reportedly still not wiling to let go of such
funds.

Elsewhere during the hearing, finance commission chairman
Paskah Suzetta said the commission would urge the government to
review the position of the BPKP as it had similar duties as those
of the Supreme Audit Agency (BPK), which is independent of the
government.

"We will ask the government to consider merging the BPKP with
the BPK in order to boost the efficiency of state administration,
and improve the reliability of audit findings," said Paskah, who
is from the Golkar Party.