Commission denies ordering Pertamina investigative audit

Tony Hotland, Jakarta

Legislators have denied asking state-owned oil and gas company Pertamina to perform a forensic and investigative audit of past financial statements to locate the root of the company's current cash flow troubles.

The head of House Commission VIII on mining and energy affairs, Irwan Prayitno, said on Friday the commission never made such a request, adding the commission could simply use the audit done by the Supreme Audit Agency (BPK).

"Why should we ask them to conduct such an audit? We can, and always, use audit reports from the BPK," Irwan said.

Pertamina's chief financial officer, Alfred Rohimone, said on Monday it was preparing to conduct a forensic and investigative audit of its past financial reports at the commission's request. He said the request was made because of suspicions the company's former management, led by Baihaki Hakim, had mishandled Pertamina's finances.

Baihaki chaired Pertamina from early 2000 to September 2003 before the current management led by Ariffi Nawawi took over.

Alfred's statement came amid a media storm over the company's plan to sell two supertankers that are being built in South Korea on the order of Pertamina's previous management.

Because the sale has caused such a storm of protest, some observers suspected that the investigative audit was part of a smear campaign against Baihaki.

A BPK audit report, obtained by The Jakarta Post, shows that the audit agency gave Pertamina's 2002 financial report a "qualified opinion", meaning that it believed all of the figures in the company's financial reports were justifiable, except for one or several posts.

Among the problems discovered by the BPK was the inclusion of financial reports of liquefied natural gas (LNG) operations that, according to the report, made Pertamina's financial figures "higher than the reality".

In truth, Pertamina did not have any shares in the LNG operations.

Irwan said the commission had asked for a clarification from Pertamina on the matter and that the commission had accepted the company's explanation.

"As always, if the BPK finds some irregularities we summon the concerned party to provide an explanation. As far as I remember, Pertamina's explanation was quite normative and we accepted it," he said.

Commission deputy Agusman Effendi confirmed that the commission had not asked Pertamina to conduct a forensic audit.

Irwan said that what the commission wanted was Pertamina's latest financial books to help it get the big picture of the company's actual financial situation.

"Then we hopefully could provide input on how to improve its condition or increase its profit margin," he said.

Pertamina has been dealing with serious financial problems despite its reported profits. The company has about Rp 17 trillion (US$1.82 billion) in debt to the government. It also has been struggling to cover ballooning oil prices, which shot up to $40 per barrel recently.