Bribery scandal

Bribery scandal

The mass media has recently carried many reports on alleged
bribery of Indonesian tax officers and other government officials
(from the State Secretariat and the National Development Planning
Board) by a number of Japanese contractors operating in
Indonesia. They reportedly included Kajima, Taisei, Obayashi,
Tekken, Tokay Kagyo and also Udinda, an Indonesian enterprise,
and were aimed at either obtaining tax concessions or winning
tenders of projects financed by Japan's Overseas Development
Agency. Bribes reportedly came to hundreds of millions of yen or
tens of billions of rupiah. Allegations were exposed by Japan's
tax bureau, which carried out its investigation into the head
offices of the above Japanese contractors in Japan.

The Indonesian government must pay serious attention to this
matter to ensure that its reputation will not be tarnished and
also that such cases, if true, will not recur. To show its
sincerity in this respect, the government must carry out its own
thorough investigation and bring to court anybody accused of
bribery pursuant to Anticorruption Law No. 3/1971. In Indonesia,
those authorized to conduct this investigation are the
Directorate General of Taxation, the Inspector General of the
Ministry of Finance, the Development Finance Comptroller (BPKP),
the Police and the Attorney General's Office.

They all must establish cooperation in carrying out this
investigation, which may be conducted as follows:

(a) All tax documents kept at the Directorate General of
Taxation must be examined to find out whether there are any
irregularities. As these contractors are foreign companies, the
tax documents may be kept at the Jakarta Tax Service for
Corporate Taxpayers and Aliens. Information must be sought from
tax officers handling tax requirements of these Japanese
contractors in 1996 and 1997.

(b) The Directorate General of Taxation can contact Japan's
tax bureau to request information about the results of its
investigation. Indonesia and Japan have signed an agreement on an
exchange of tax information regarding taxpayers in the two
countries.

(c) Summon and examine the representatives in Indonesia of the
Japanese contractors to determine to whom the alleged bribes were
made.

The Directorate General of Taxation must not remain idle on
the pretext that the mass media reports are general in nature and
lack clarity. Please pay attention to this matter. Government
officials involved in corruption must not be protected.

SUHARSONO HADIKUSUMO

Jakarta