Fairground case causes city to lose $200m

JAKARTA (JP): City Council Commission B for Economic Affairs revealed that the city administration had suffered a total loss of US$200 million during its almost 10 years of cooperation with private companies in managing the annual Jakarta Fair.

Councillor Ugiek Soegihardjo said the administration, through its Jakarta Fair operator Pekan Raya Jakarta (PRJ) foundation, founded in 1969, had suffered losses since 1992.

"We will summon officials believed to be involved in causing the losses, including former governor Wiyogo Admodarminto and PRJ's former head Soekarjo," Ugiek of the Indonesian Democratic Party of Struggle told reporters here on Monday.

He said PRJ had been profitable from 1969 until 1992, when the site of the fair was moved to the Ancol area, North Jakarta, from the National Monument (Monas) park in Central Jakarta.

During its two-year (1992-93) cooperation with city-owned developer PT Pembangunan Jaya Ancol to manage the fair in Ancol, PRJ, which has 46-hectares of land in the Ancol area, incurred an operating loss of Rp 271 billion ($28,526,315).

He said part of the loss allegedly resulted from the price manipulation of PRJ's land in Ancol.

PT Pembangunan Jaya Ancol bought the land for Rp 13 billion and sold it to buyers for Rp 800,000 per square meter or Rp 368 billion, Ugiek said.

"Based upon the assumption that 25 percent of the land was used for the site of the fair, the developer secured Rp 271 billion in profit," he said.

Considering that the Ancol area was no longer feasible for the fair, PRJ then moved it to the defunct Kemayoran airport.

He said that PRJ has since then cooperated with PT Jakarta International Trade Fair (JITF) to manage the annual fair.

JITF is 42.5 percent owned by a Japanese consortium, 52.5 percent owned by PT Jaya Nusa Pradana and 5 percent is owned by state-owned Kemayoran Management Body.

PT Jaya Nusa Pradana is 75 percent owned by PT Griya Nusa Pratama and 25 percent owned by city-owned Pekan Raya Jakarta foundation.

Ugiek said the council found that PRJ had paid capital of Rp 33 billion by providing 44 hectares of land, while PT Griya Nusa Pratama, owned by businessman Edward S. Soeryadjaya, contributed nothing.

He said PRJ even owed Rp 33 billion to Bank Summa, also owned by Edward, for buying the land from the state secretariat.

"PT Griya should pay a total of Rp 106 billion for its 75 percent shares in PT Jaya Nusa Pradana," he said.

He said the Japanese consortium also did not contribute any capital. A total sum of US$140 million it provided to the JITF was regarded as a loan.

Chairman of commission B Syarief Zulkarnaen Syarief viewed there were irregularities when former governor Wiyogo approved the rescheduling of the loan in 1994.

"Wiyogo should explain it. We haven't yet come to the conclusion that there is a corruption case here," Syarief said.

During a hearing with the commission recently, Edward who is also JITF's president, revealed that the company planned to sell 10 hectares of land in Kemayoran to cover its debt, which amounted to Rp 40 billion.

The councillors voiced concerns of "insider trading" behind the plan as Edward would sell the land to his own company PT Griya, which would reportedly develop a condominium in the area.

Edward said that the plan to sell the land has been made according to the prevailing procedure, claiming that the land belongs to JITF. (jun)