Defense equipment mark-up practices likely to continue
Defense equipment mark-up practices likely to continue
Tiarma Siboro, The Jakarta Post, Jakarta
The rampant practice of exorbitant mark-ups will likely continue
as a senior defense official responsible for equipment
procurement has refused to cut out the role of contractors.
Director General of Defense Equipment Procurement Maj. Gen.
Aqlani Masa claimed that contractors were still needed for
purchasing defense equipment.
"Otherwise, we don't have enough money to pay in cash," he
told The Jakarta Post in an interview last Friday.
Aqlani's view was in contrast to those of Maj. Gen. Sudradjat,
director general for defense strategy at the Defense Ministry who
told the Post last Wednesday that the government must change its
procurement policy to prevent the mark-ups.
The current policy dates back to the 1970s and stipulates that
all government ministries must use contractors to procure their
needs.
Aqlani was also at odds with all chiefs of staff of the
military who had urged the government to bypass the contractors
and purchase the equipment directly from the manufacturers.
During her visit to the Czech Republic last month, President
Megawati Soekarnoputri said that mark-up practices in defense
equipment purchasing was rampant in the past.
The Indonesian Military (TNI) has been campaigning to double
its budget allocation from Rp 9 trillion (US$1 billion) to Rp 18
trillion next year.
"In the future, I suggest the government find out the exact
prices of this equipment from the manufacturers. If only the
president knew the prices, I'm sure that she would have seen that
other contractors incapable of offering exorbitant contract
prices," Aqlani said.
Aqlani, however, acknowledged that many irregularities which
caused losses perhaps on the billions of dollars did occur in the
past.
"I admit that in the past, the military's procurement partners
were mostly relatives of the Cendana clique. What could we say
about it?," Aqlani said referring to the street name where the
former ruler Soeharto and many of his family members live.
He added that not a cent of the misused money went to any
military institution. He did not elaborate.
Aqlani admitted that there were rules and regulations
pertaining to the procurement process, but those amounted to
nothing when, "the TNI was suddenly contacted by the Cendana's,
claiming that they would be making themselves available as
contractors."
Many believed that Soeharto had enriched himself in this way
-- some estimate his wealth to be in the tens of billions of
dollars -- during his 30-year rule, but efforts to recoup that
money legally have come to naught.
A military source told the Post that former U.S. president
Bill Clinton was peddling a small squadron of F-16 jets to
Soeharto to in 1996, after the Congress cut U.S. military ties
with Pakistan which at the time was developing a nuclear project.
"The U.S. offer included insurance coverage and Pak Harto
agreed to buy nine F-16s at the price of $8 million each, or
equal to one third of the price of Indonesian made CN-235s.
"But suddenly the TNI headquarters received a proposal from
the company of Bambang and Tutut's husband Indra Rukmana,
offering an insurance scheme for the jet planes. We, of course,
became confused since it was impossible to reject it at the
time," the source said.
The project was canceled due to the human rights violations in
the country.
According to the source, the military's outrageous shopping
spree was held in the 1990s when Gen. (ret) Eddy Sudrajat and
Gen. (ret) Hartono were in charged as Minister of Defense and the
Army Chief of Staff respectively.
"At the time, the government set up a team to monitor the
projects led by former minister of research and technology B.J.
Habibie," the source said.
Members of this team were, among others, Rahardi Ramelan of
the National Development Planning (Bappenas) and former Bulog
head now on trial in a major graft case, former minister of
finance Mar'ie Muhammad, former TNI chief Gen. (ret) Feisal
Tanjung and Eddy, the source said.