Forestry minister seeks to recover diverted funds

JAKARTA (JP): Minister of Forestry and Plantations Muslimin Nasution said on Friday that he would do his best to recover all the Rp 23 billion (US$2.8 million) reforestation funds used to buy shares of the now disbanded PT Dua Satu Tiga Puluh (DSTP) jet development company.

But Muslimin said he would follow the DSTP liquidation process as mandated by the company's shareholders meeting in December.

"I don't know whether the money could be returned to the forests. Basically, reforestation funds should not be used for projects not related to reforestation. God willing, we will get the money back," Muslimin said.

In 1996, then-president Soeharto ordered the ministry of forestry to set aside Rp 23 billion (US$10 million on the exchange rate in that time) from the interest earned on reforestation funds to buy 10,000 shares of DTSP.

DSTP was a company set up in February 1996 to finance the construction of the 100-seater N-2130 jet by state-owned aircraft manufacturer PT Industri Pesawat Terbang Nusantara (IPTN).

The shares were later transferred to the Bina Raharja Foundation, a private institution established by retired civil servants.

Soeharto founded DSTP in 1996 as a private company. The company started directly offering shares to the public in March 1997 at US$1,000 (Rp 2.4 million at the time) a share, without being listed on the stock exchange.

Minister of Communications Giri Suseno Hadihardjono, a DSTP director, said earlier this month that the government had pledged to return all the Rp 1.3 trillion collected by DSTP to finance the N-2130 project.

In a meeting with shareholders in December, it was decided to disband and liquidate the company because the jet development project was considered to be no longer viable amid the economic crisis.

"The company is undergoing a liquidation process. All the money collected will be reimbursed after it is reduced with obligations to IPTN," Giri said.

DSTP's president, Saadilah Mursjid, said earlier that DSTP had channeled Rp 250 billion to IPTN and the money could not be recovered.

Under the financing agreement with the Bandung-based IPTN in October 1996, DSTP would provide $2 billion for IPTN to design, develop and produce two types of N-2130 passenger jets and obtain certification for the aircraft from at least three international sources, including the U.S. and Japan.

During his tenure in power, Soeharto also ordered the ministry of forestry to use another Rp 400 billion from the reforestation fund to help finance IPTN's operations. The money was later converted into the government's stake in the aircraft company.

Since April 1, the government has accounted for reforestation funds, collected from timber companies, in the state budget as non-tax receipts. Previously, the funds were transferred into the Ministry of Forestry's bank account and its allocation was governed by presidential decree. (gis)