Govt out to check if picks for state firms measure up

JAKARTA (JP): The government said on Monday it would apply fit and proper tests for prospective appointees to state-owned companies' boards of directors to ensure they possessed the integrity and capability to lead the firms.

The deputy minister for control and supervision at the Office of the State Minister of Investment and State Enterprises Development, Bacilius Ruru, said the new policy would apply to all state enterprises under the supervision of his office.

"We will make sure that the future management of state companies would show integrity and capability," Bacilius said in a news conference.

He said the government planned to issue a ministerial decree this week to set the qualification for such jobs, adding that it would not affect members of the current management of state companies unless they were subsequently promoted.

Under the policy, he said, the office of the state minister would set up a special team to evaluate the suitability of potential candidates.

Bacilius said the team would view candidates' track records in judging their integrity, especially regarding corruption, collusion and nepotism.

"For the team to do so, it will need references which at first may be a statement from the candidate himself," he said.

Members of the public would also be encouraged to report any alleged wrongdoing by the prospective appointee.

To determine candidates' capabilities, background information on their education and work experience would be evaluated by the team.

"If a candidate were to be appointed for a financial position, the person must at least have an understanding of finance and related work experience," Bacilius said.

If several candidates are short-listed, they will be asked to present the programs they would introduce if appointed.

Bacilius, the former chairman of the Capital Market Supervisory Agency (Bapepam), denied the policy was a ploy to block outside interference in the appointment of state companies' presidents.

"What is important is that everyone intending to become presidents of state companies must undergo this fit and proper test," he said.

Major state companies such as oil and gas firm Pertamina have often been targeted by political parties to position their people in influential positions.

Bacilius said the government, as a majority shareholder in state companies, intended to increase the companies' value by applying the fit and proper policy.

There are 157 companies under the state ministry, eight of which are set for privatization this year, including fertilizer company PT Pupuk Kaltim, general mining company PT Aneka Tambang and coal mining company PT Batubara Bukit Asam.

Bacilius said the government expected to raise some Rp 5.9 trillion (US$797 million) from the privatization.

State Minister of Investment and State Enterprises Development Laksamana Sukardi earlier said that the eight companies were among the best managed state companies in the country. He said their sale would be attractive to both local and foreign investors.

Bacilius said that increasing the value of state companies required the implementation of good corporate governance based on the principles of transparency, accountability, objectiveness and responsibility.

"We therefore decided that fit and proper tests are necessary in achieving good corporate governance."

Bacilius said his office would also assign a P.O. Box to allow the public to submit their complaints about the management of state companies.

Top executives of state companies are often accused of being overly influenced by affiliated ministers, making them less transparent in their decisions.

"We're also planning to set up a website, which would pose information on state companies and investment," he said.

He said the site would be run by a professional company to keep its content updated and well managed, adding that access to some information would therefore be subject to a fee.

In achieving transparency and also cost efficiency, the state ministry planned to require state companies to use e-commerce in the procurement of services and products.

Bacilius said the government was aware of the huge costs in undertaking e-commerce investment, but said it could not ignore its development. (bkm)