Indications of graft at plantation companies

Indications of graft at plantation companies

Rendi A. Witular, The Jakarta Post/Jakarta

A day after naming 16 state-owned enterprises he said were
riddled with graft, State Minister of State Enterprises Sugiharto
plans to put the spotlight on 15 more SOEs, most of them in
plantation.

Speaking after a meeting with Vice President Jusuf Kalla on
Friday, Sugiharto said Thursday's announcement of the 16
companies was just the tip of the iceberg as far as corruption in
state enterprises went.

"That announcement was just a start. Corruption occurs in all
state enterprises, and just now I have received reports that many
state plantation companies are also riddled with such practices,"
Sugiharto said.

There were 15 state plantation companies -- PT Perkebunan
Nusantara I through XIV and PT Rajawali Nusantara Indonesia --
that would be included on the list of the most corrupt state
enterprises, he said. These 15 companies have assets totaling
more than Rp 15 trillion (US$1.59 billion).

Sugiharto named the first 16 companies based on audit report
by the Supreme Audit Agency (BPK) and the State Development
Comptroller (BPKP), with the result being forwarded to the
prosecutors and police.

"Should the report and investigations into the executives (of
the 16 firms) prove that they are guilty, I won't hesitate to
dismiss them immediately. It is part of the president's
instruction to combat rampant corruption within state
enterprises," Sugiharto said.

On Thursday, the Office of State Minister of State Enterprises
reported to the House of Representatives strong indications of
corruption at 16 state enterprises, including five publicly
listed firms: Bank Mandiri, Bank Rakyat Indonesia, Bank Negara
Indonesia, PT Perusahaan Gas Negara and PT Indofarma.

In a separate event, Sugiharto explained that corruption at
state enterprises was mostly in the form of "improper
procurements" and dishonest transactions, which had caused
massive losses to the state and lowered the companies'
performances.

As of last year, there were a total of 158 state firms with a
combined asset value of Rp 1,200 trillion.

Most of the companies have been poorly managed for a long time
and suffered from very low rates of return on investments and
equity due to the intervention of vested political interests.
Unscrupulous politicians are known to divert revenues from the
firms into the coffers of political parties.

In a related move, BPK chairman Anwar Nasution said the agency
had submitted audit reports on high-profile corruption cases at
five state institutions to the government's newly established
anticorruption team -- consisting of officials from the Attorney
General's Office, the National Police and the BPKP.

Anwar said among the urgent institutions to be investigated,
as ordered by President Susilo Bambang Yudhoyono, were state
social security firm PT Jamsostek, Bank Mandiri, state oil and
gas firm PT Pertamina and the Ministry of Health.

Sources at the BPK said that these institutions were found to
have allegedly misused state funds worth a combined Rp 3
trillion. (002)

I-box
State firms financial performance
(in billions of rupiah)

2001 2002 2003 2004*

Firms 150 158 157 158
Assets 810.419 935.587 1,163.644 1,161.177
Liabilities 678.783 662.539 761.507 780.118
Equities 129.683 269.621 397.198 391.781
Revenues 215.467 238.048 464.205 484.377
Profit 18.448 25.665 25.611 29.428

Return on assets 2.28% 2.74% 2.20% 2.14%
Return on equity 14.82% 9.52% 6.45% 6.36%

Firms recorded losses 48 firms 70 firms 47 firms 28 firms

* Unaudited
Source: Office of the State Ministry of State Enterprises