Government rejects take over of consortium's debt

Government rejects take over of consortium's debt

JAKARTA (JP): Minister of Justice/State Secretary Muladi said
on Thursday that the government would not underwrite the debt of
the 19th Southeast Asian (SEA) Games consortium, but would hire a
public auditor to reaudit the consortium's financial reports.

Former state minister of youth affairs and sports Hayono
Isman, who made the deal with the consortium, also disagreed with
his successor Agung Laksono's statement last week that the
government should take over the consortium's Rp 35 billion
(US$5.2 million) debt to the State Secretary.

Speaking to reporters at Merdeka Palace, Muladi said the
government would investigate whether the consortium's failure to
pay its debt was based on mismanagement or force majeure.

"We have to know if it's because of force majeure due to the
economic turmoil, or instead due to the consortium's
miscalculation. We can't take any action before we find out the
truth," he said.

The consortium's executive director Bambang Riyadi Soegama met
Agung and Deputy Attorney General for Civil and State
Administration Wan Jacob Rahim Saleh to ask the government to
take over its debts.

A financial report from the consortium last year said it
suffered a Rp 68 billion deficit after staging the biennial event
this year.

The consortium, headed by former president Soeharto's son
Bambang Trihatmodjo, has a total debt of Rp 156 billion from the
original estimation of Rp 75 billion when the financial crisis
hit the country in mid-1997.

Muladi said the government was not responsible for providing
the funds to stage the event because the consortium agreed it
would take meet all costs.

Separately, Hayono said Agung should have requested approval
from President B.J. Habibie and the House of Representatives
before commenting.

"With the statement, the public will be more suspicious that
the consortium is conspiring to write off its debts. He should
have not publicized the statement before being approved by the
President or the House. The minister's office has not learned
from the past.

"I was the minister then and the consortium promised to take
full responsibility even if it had to suffer a deficit. If they
want the government to take over the debt, it amounts to it
reneging on its own commitment," said Hayono, who is also
chairman of the Indonesian Archery Association (Perpani).

He said the extent of the government's responsibility was to
provide facilities to stage the event, including giving the
permit to build an athletes village. In a controversial move, the
consortium built the 40-story Mulia Hotel in Senayan.

He urged the consortium and the minister to bring the problem
before legislators.

"It's about the public's money. I had no idea that the money
came from the reforestation fund. I only knew it was from the
President. Personally, I feel bad about it," he said. "I had
urged earlier that the consortium could pay all the debts in
installments."

Hayono said the Rp 35 billion debt was one fifth of the total
debt and the consortium should prioritize its repayment.

But he did not want to report on the matter to the incumbent
legislature.

"I am powerless and I don't think House members now could
solve the problem."

Hayono said he would discuss the problem with new legislators.

"House members also could invite representatives of the
Indonesian Consumers Foundation or other NGOs which care about
sports to the hearing with the consortium," he said.

The consortium also owes Rp 1.73 billion to several hotels
which accommodated athletes during the Games.(prb/yan)