Forestry minister seeks to recover diverted funds

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)