Graft worth $27.3m suspected at Tugu
JAKARTA (JP): The Supreme Audit Agency (BPK) has found irregularities involving over Rp 260 billion (about US$27.36 million) in insurance firm PT Tugu Pratama Indonesia, which is owned by state oil and gas company Pertamina.
The BPK's report, a copy of which was obtained by The Jakarta Post, said that it had found irregularities in the transfer of Tugu shares, its tax and dividend payments, and other inefficiencies that amounted to a total potential loss of Rp 260 billion.
Legislators criticized on Wednesday Pertamina's slow response in following up on the BPK's findings.
"With this amount (Rp 260 billion), the Tugu case should have been long ago revealed to the public," legislator Pramono Anung said during a hearing between Pertamina and the House of Representatives' Commission VIII, which among others things oversees the energy and mining sectors.
Pertamina, Anung said, should have brought the BPK's report to the Attorney General's Office immediately on learning of the indications of graft.
The report, dated Dec. 19, 2000, said indications of tax irregularities had been found in the payment of Tugu dividends, resulting in losses of Rp 39.10 billion to the state.
The BPK also questioned donations of Rp 33 billion made by the insurance company to various foundations and organizations.
Other inefficiencies reported were related to the supply of seven official cars worth Rp 4.56 billion to former members of Pertamina's board of directors, and questionable investment decisions costing Rp 100.08 billion.
It also suspected a loss of Rp 50.49 billion under what the BPK called a dubious transfer of Tugu shares to the Pertamina pension fund. The report did not say by whom the shares had been transferred.
Tugu is 20 percent owned by the Pertamina pension fund.
Pertamina itself owns 45 percent of Tugu, while the remaining 35 percent is still the subject of a dispute between Pertamina and PT Nusantara Ampera Bhakti (Nusamba).
Nusamba is a widely diversified business group, which is 80 percent owned by the Dakab, Dharmais and Supersemar foundations linked to former president Soeharto.
The government had seized assets from the three foundations, following the laying of corruption charges against Soeharto in 1999.
Mohamad "Bob" Hasan has a 10 percent stake in the business group, with the remaining 10 percent being owned by Soeharto's eldest son Sigit Hardjojudanto.
Hasan was one of Soeharto's closest associates.
Pertamina had intended to purchase the Nusamba stake, but hesitated on suspicion that the 35 percent stake consisted of empty shares.
If Nusamba had acquired the 35 percent stake in Tugu for free, Pertamina would refuse to pay Nusamba for the stake.
Since its founding in 1981, Tugu has grown to become the country's largest insurance company, largely due to the monopoly it enjoyed over indemnity insurance in the oil and gas sector for over a decade.
Although Hasan was only a minority shareholder in Tugu, he practically controlled the insurance company during the Soeharto era.
Under Hasan's control, the company reportedly charged Pertamina marked up premium rates.
Hasan is now serving a two year sentence after being found guilty of stealing $75 million in reforestation funds belonging to the Ministry of Forestry.
During the hearing, legislators questioned Pertamina's inability to solve its dispute with Nusamba.
Pertamina announced in 1999 that it planned to acquire Nusamba's stake, but on Wednesday Pertamina president Baihaki Hakim said the company had not yet completed the purchase.
However, Nusamba has reportedly transferred its 35 percent stake to the Indonesian Bank Restructuring Agency (IBRA) as a guarantee for the repayment of Hasan's debts to local banks.
Baihaki said that the company and IBRA were conducting financial due diligence to verify Nusamba's stake in the insurance firm.
Pertamina, he said, was waiting for the BPK to finalize its report before bringing the case to the Attorney General's Office.
"The process takes time, but we want to go through it systematically," Baihaki said at the hearing. (bkm)