Commission denies ordering Pertamina investigative audit

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.