ICW links Soeharto to city water deal

ICW links Soeharto to city water deal

JAKARTA (JP): The Indonesian Corruption Watch (ICW) urged the
government on Thursday to investigate former president Soeharto
for alleged involvement in a Jakarta tap water deal which
reportedly caused the state Rp 4.98 trillion (US$554 million) in
losses.

Terming the deal illegal, ICW coordinator Teten Masduki told a
news conference that both Soeharto and former public works
minister Radinal Mochtar were responsible for agreements between
city-owned tap water company PDAM Jaya and two foreign partners,
Pam Lyonnaise Jaya (Palyja) and Thames Pam Jaya (TPJ).

He said Radinal should also be investigated.

"We call the deal a kind of takeover, not a privatization. It
violates the law," Teten said at the conference, which was also
attended by at least 50 PDAM Jaya employees.

Soeharto and Radinal, he said, were involved in the
appointment of two private firms, PT Garuda Dipta Semesta, partly
owned by businessman Anthony Salim, and PT Kekar Thames Airindo,
partly owned by Soeharto's eldest son Sigit Harjojudanto, which
were later changed to Palyja and TPJ after Soeharto's sudden
resignation in May.

He said ICW's investigation determined Anthony had resigned
from Palyja, but Sigit still owned 5 percent of TPJ's shares.

"Although the two firms have changed their names, they still
operate under the old agreements. As there is no new agreement,
it's illegal."

According to Teten, the appointment of the two firms violated
the law on foreign investment since it was not based on a public
tender.

It also violated the 1945 Constitution, especially Article 33
which stated that land, water and other natural resources should
be managed by the state, he said.

Teten said ICW calculated the Rp 4.98 trillion losses,
including a loan of Rp 2.4 trillion from the World Bank, lost
city revenues of Rp 5 billion and a government subsidy of Rp 910
billion.

"We will report our findings to the National Police and the
Attorney General's Office for investigation," he said.

He said findings would also be sent to the Ministry of Home
Affairs and Governor Sutiyoso.

Dressed in their blue uniforms, the employees unfurled posters
demanding the revocation of the water agreements.

"The water firm must be returned to PDAM Jaya," Murdiyanto,
chairman of PDAM Jaya worker union, said.

He alleged the two foreign firms had invested nothing and only
utilized PDAM Jaya's facilities for their own benefit.

Murdiyanto said the foreign firms did not care about
employees welfare because PDAM employees were paid much less than
their own employees.

Contacted by The Jakarta Post on Thursday, executives of the
two firms countered the allegations were baseless.

Bernard Lafronge of Palyja and Nani Sariati of TPJ questioned
how ICW calculated the state losses.

"It's not true. Where did it get the amount? We have never
borrowed from the World Bank," said Nani, TPJ's sales and
marketing manager.

Lafronge said his firm secured loans from European private
banks with its corporate guarantee. "Our firm has an
international reputation, so we could get the loan."

He also denied allegations about the subsidy and said the
appointment of the firms was aimed to ease the subsidy.

Nani denied Sigit retained a share in the firm. "Not a single
share of our firm is owned by Sigit. We have all the legal
documents."

She said the firm's legal team checked to ensure the water
deal signed in February last year did not violate the law. (jun)