ICW accuses Soeharto's relative of tax evasion

JAKARTA (JP): Indonesian Corruption Watch (ICW) alleged on Friday that a company owned by a relative of former president Soeharto was involved in a tax scam that caused the state at least Rp 30.2 billion (US$4.02 million) in losses.

The Coordinator of ICW's working committee, Teten Masduki, said PT Angkasa Bina Wisesa (ABW), which is owned by Soeharto's brother in law Tubagus Sulaiman, manipulated its financial reports to avoid paying tax during its four-year operation.

Tubagus is the husband of Soeharto's step sister, Martini Nita Karyati.

"Public sources said the company started cheating on its taxes at the start of its operations in mid-1994 and continued until 1997. But our investigation is based on the accurate financial data of the 1996 and 1997 fiscal years," Teten told a media briefing.

The company's executives were, however, not available for comment.

ABW, established in 1993, works in the airline cargo and warehouse sector. It ran Garuda's cargo warehouse facility at Soekarno-Hatta International Airport from 1994 until last September.

Garuda annulled its contract with ABW on Sept. 15, four months after Soeharto stepped down, after indications of graft emerged.

Under the contract, ABW was given the authority to manage Garuda's warehouses by paying the airline royalties in the form of 14 percent of its gross income, which normally exceeded Rp 300 million a month, Teten said.

The warehouses were previously managed by Garuda, until ABW took over the management using the airline's own equipment. ABW later replaced Garuda's equipment with its own.

Garuda spokesman Pudjobroto said Garuda did not benefit from the contract because it was able to manage its own cargo warehouses and earned more than the mere 14 percent royalty from ABW.

"Because of this, I think the contract with ABW was considered to involve collusion, and thus it was canceled," Pudjo told The Jakarta Post.

The corruption watchdog findings shows that ABW reported lower revenues in its financial statement and higher expenditure to reduce taxable income.

According to ICW's calculation, ABW owed Rp 10.07 billion in unpaid taxes to the state in the last two fiscal years.

The unpaid taxes, coupled with a maximum 200 percent addition in tax administration fines, should total about Rp 30 billion owed to the state, excluding potential losses incurred in 1994 and 1995, he said.

Since the investigation into Soeharto's wealth began, following his hasty resignation in May, Garuda has canceled eight contracts with companies related to the former first family and its cronies. (das)