Councillors find graft under hotel carpet
Ahmad Junaidi, The Jakarta Post, Jakarta
The City Council announced on Wednesday that it would set up a special team to investigate alleged corruption in a collaborative venture between the city administration and a private firm to build the five-star Sheraton Media Hotel in North Jakarta.
"The administration suffered losses due to a reduction in its shareholding in the hotel," councillor Dani Anwar, the secretary of the Council's commission B for economic affairs, told reporters.
Dani, of the Justice Party, said the administration collaborated with developer PT Bhakti Citradaya, which was owned by publisher Surya Paloh, to establish the joint venture company PT Grahasahari Suryajaya, which built the hotel in 1992.
The administration contributed a site of 18,828 square meters worth Rp 14 billion on Jl. Gunung Sahari. Under the agreement, this contribution entitled the administration to 25 percent of the total shares in the joint venture company.
"We discovered that PT Bhakti invested nothing in the joint venture," Dani said.
PT Grahasahari, the joint venture firm, then secured a loan of US$50 million from state-owned Bank BNI to develop the hotel, he said.
Since the firm could not repay the loan, the debt was then converted into a 57.9 percent shareholding in the company. As a result, the administration's stake decreased from 25 percent to 7 percent while PT Bhakti's stake declined from 75 percent to 34.6 percent.
Separately, Councillor Sambudi Bakri of the National Mandate Party said the council would question the decrease in the city's stake in the hotel.
"According to the agreement, the city's shareholding in the hotel could not be changed even if there was additional investment," Sambudi, a member of Commission B, told reporters.
Besides losses arising from the reduction in the city's stake, he said the hotel management had never made a contribution to the city budget since the hotel was built.
The council held a hearing with hotel executives on Tuesday evening.
The hotel management offered to increase the administration's stake from 7 percent to 11 percent if the city handed over the land title deeds to Bank BNI, which now had a controlling interest in the hotel.
"We rejected the offer. The city's stake should be 25 percent as stated in the agreement," Sambudi said.
The council found that the joint-venture firm had secured the loan from Bank BNI without using the title deeds as collateral.
According to the administration, it had never handed over the title deeds as the joint-venture firm had failed to develop a number of public facilities, such as a public hall and a mosque in the area as had been stipulated in the collaboration agreement.
The council has set up a number of special teams to investigate corruption in joint ventures involving the administration and the private sector.
One of these teams has concluded that there was corruption involved in a joint venture between the administration and a private sector firm in the setting up of the PT Jakarta International Trade Fair company, which manages the Jakarta Fair Ground in Kemayoran Central Jakarta.
However, these findings and the recommendations of other investigative teams have never been followed up with legal action.