Military hands in inadequate report on wealth: BPK

Military hands in inadequate report on wealth: BPK

Tony Hotland and Tiarma Siboro, The Jakarta Post, Jakarta

Over Rp 38.8 billion (US$3.85 million) worth of profits from
assets of the Indonesian Military (TNI), which were used by third
parties, have not been accounted for, according to a Supreme
Audit Agency (BPK) report on the central government.

Presented to the House of Representatives last week, the 2004
report also reveals that the Ministry of Defense did not pay any
taxes on more than 167,000 hectares of TNI land.

The uncertified land is mostly under control of the Air Force,
the defense ministry and the TNI headquarters.

Profits from the use of the TNI assets, the report states,
have instead been spent internally by the military without making
maximum contributions to the state's finances.

The unreported funds included compensation and profits reaped
by the Navy's main cooperatives (Inkopal), the Navy's primary
cooperatives (Primkopal), the Navy's central cooperatives
(Puskopal) and hospitals run by all the Navy, the Army and the
Air Force.

A total of Rp 1.53 billion in profit made by Inkopal was not
reported, in addition to Rp 255 million for doctors' housing near
one of the Navy's hospitals and Rp 441.9 million in the form of
annual fees for administrative and operational costs from PT
Trisaha Eka Pradana.

According to Inkopal, by the end of 2004, a total of Rp 28
billion in unreported compensation from the use of state assets
by third parties was attributed to the Navy headquarters.

The figure included Rp 20 billion from PT PGE for a five-
hectare plot of land for a supermarket project in North Jakarta
and Rp 5 billion from PT Trisaha Eka Pradana for a 1.5-hectare
site for an automotive center in North Jakarta.

Furthermore, the BPK report reveals unreported profits made by
hospitals run by the TNI's three forces in 2004, totaling at
least Rp 7.7 billion.

Responding to the report, the Ministry of Defense argued that
the funds had not been reported due to technical problems, citing
the absence of guidelines on the obligation of deposited profits
from the use of TNI assets.

The TNI's dubious reports of their assets have often become
problems, while on the other hand, the military has long been
complaining about the lack of an adequate defense budget as its
main reason for its poor performance.

Now with Law No. 34/2004 on military reforms that allows the
government to take over all of TNI's businesses within five
years, many hope that more accountable financial management would
be introduced into the powerful military.

Ministry of Defense secretary-general Maj. Gen. Sjafrie
Sjamsoeddin has said that Sept. 27 was set as the deadline for
all military units to submit reports over their respective
assets.

In cooperation with four relevant ministries, including the
State Ministry of State Enterprises, the defense ministry planned
to evaluate all of TNI's business units before giving suggestions
to the President on how to handle them.

Sjafrie said his office could not make any moves until the
military units sold their assets to certain private companies
prior to the Sept. 27 deadline.

The Navy has reportedly released its ownership of several
companies, which it claims were unprofitable. Also, the Army's
Kartika Eka Pakci Foundation has reportedly sold its 20 percent
stake in PT Artha Graha, a private company owned by businessman
Tomy Winata.

Sjafrie said that in general, the military enterprises were no
longer profitable, especially after the reform movement, which
bans servicemen from involvement in businesses.