Corruption still name of game in Jakarta

Corruption still name of game in Jakarta

Bambang Nurbianto, The Jakarta Post, Jakarta

Collusion and corruption are still rampant in procurements of
goods and services in nearly all units of the city
administration.

A number of executives of goods and services suppliers to the
city government said that collusion and corruption could take
place both when firms were directly appointed to take charge of
projects and when projects were put out to tender.

Because of such illegal practices, only around 50 percent of
the total allocated funds was spent on procuring goods and
services while the other 50 percent was embezzled by suppliers
and the officials involved in the tender or direct appointment
process.

"The officials involved in the procurement process can receive
up to 35 percent of the total allocated funds," a director of a
supply company, who spoke on condition of anonymity, told The
Jakarta Post on Wednesday.

The source said the officials who usually took a cut included
project leaders, members of tender committees (at least five
persons), members of supervisory committees (at least five
persons), and the heads of city government units.

He cited as an example a situation where the funds allocated
for procuring equipment were Rp 100 million (US$11,000). Only Rp
50 million of this money would actually be used to buy the
equipment while between Rp 35 million and Rp 40 million would go
into the pockets of the officials involved. The rest would go to
the supplier as an additional sweetener.

As the 2002 city budget reaches Rp 9.3 trillion, the goods and
services procurement field involves a major amount of money.

According to the source, the winners of tender competitions
have usually already been decided on before the process begins.

Members of the tender committee or project leaders usually had
set up their own men as the winners of the tender before the
bidding even began. They also normally had already reached an
agreement with their partners about the percentage of the
allocated funds that each would receive.

The percentages received by project leaders or members of a
tender committee ranged from 10 percent to 15 percent of the
total funds allocated for the procurement. The money was usually
given in cash through a "mediator" after the winning company had
been decided.

The source said that not all the money went to the front-line
officials as there were still the members of the supervisory
committee, city government unit heads and other officials who
also received a slice of the procurement pie.

In order to give the impression that the tender process had
complied with the rules, the "winning candidate" would normally
seek six or seven front companies to take part in the bidding
process. Those companies, however, would be aware all along that
they were not going to win the tender.

"Such companies are happy if they receive Rp 200,000 each from
the winning company in a case where only a small project is
involved," said an executive of another supplier who is usually
to be found hanging around outside City Hall on Jl. Medan Merdeka
Selatan.

Neither is it difficult to find such front companies as dozens
of their owners are always to be seen hanging around the City
Hall's post office everyday.

Although they are legal, they are not like normal companies.
These companies are, in fact, one-man shows with the owner acting
both as director and secretary. Such companies usually have no
permanent office while all documents and assets of the companies
are kept in the owners' bags, which are taken everywhere they go
for business.

The second source also said that such illegal practices did
not only take place in procurements but also in other projects.
And it was not only the city administration that was affected but
central government departments as well.

Meanwhile, the city administration's Procurement and Storage
Department director, Hamdi, denied that such illegal practices
were still rampant in city procurements.

"I don't think this can happen given that all the processes
are transparent. A tender involves many parties, including the
supervisory committee. And the tenders are also announced in the
newspapers," Hamdi said.

Hamdi is right to say that tenders are announced in
newspapers, but only in carefully selected ones, namely those
with small circulations. As an example, a project worth Rp 9
billion for fencing in the National Monument (Monas) park was
only announced in the Sentana newspaper, which is unheard of by
most Jakartans.