Men arrested for swindling Telkom out of $6.3m

JAKARTA (JP): Police have arrested two businessmen for allegedly defrauding state-owned telecommunications company PT Telkom of Rp 22.7 billion (US$6.3 million).

The head of the City Police corruption investigation unit, Lt. Col. Sumardi, said yesterday that the use of fake bank documents and breach of contract were involved.

Police were still gathering evidence on the fraud, he said.

Sumardi said one man, identified only as YL, was arrested Thursday in his apartment in Kebon Kacang, Central Jakarta. The other, identified as AB, was arrested later that day in a hotel in Central Jakarta.

"Both men will be charged under the Anti-Corruption Law," Sumardi said.

"Their criminal activities brought them great profit and caused great financial loss to a state-owned company," he said.

People found guilty under article 28 of the 1971 Anti- Corruption Law Number 3 could face a maximum life sentence and/or a fine of Rp 30 million.

Sumardi said that YL's trading company in Central Jakarta, PT MAS, had a contract with Telkom to retail Telkom phone cards.

"YL never paid for the cards he took from Telkom, but used all the profit from selling the cards to buy at least 11 cars and to invest in several local and overseas companies," he said.

He said police had confiscated two Range Rovers, two Toyota Land Cruisers, two Mercedes-Benz, a Jaguar, a Nissan Patrol, a Cherokee, a BMW and an Isuzu Panther. Some of the cars would be used as evidence.

He said police were still investigating YL's investments, which include a Rp 200 million investment in a restaurant in Nusa Dua, Bali, and a Rp 1.1 billion investment in a trading company in Singapore.

YL had allegedly used some of the money to cover business costs, including Rp 2.5 billion to rent an office in Sudirman Tower, Central Jakarta, and Rp 15 million a month to rent an apartment in the Ascot building, in Central Jakarta.

Sumardi said YL had cooperated with AB in providing fake documents, including a bank guarantee required for his company's contract with Telkom.

"AB allegedly created the bank guarantee by making use of the name of Bank Rakyat Indonesia as the guarantor," Sumardi said.

He said Telkom had later checked with the bank and found the bank had not issued the document.

Sumardi said his office was looking for more information and evidence on the case.

"This is just the beginning. We'll gather more information and evidence. We may catch more suspects," he said. (cst)