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)