Misdeed costs Telkom over Rp 6t in financial loss
JAKARTA (JP): Mismanagement cost state-owned domestic telecommunications provider Telkom at least Rp 6.08 trillion (around US$715 million) in financial losses, according to the Indonesia Corruption Watch (ICW).
ICW coordinator Teten Masduki said on Thursday indications of alleged mismanagement and collusion were found in five Telkom projects dating back to 1988
"The five projects are the second Digital Telephone Exchange (STDI), the Telkom-1 satellite, investment in the development of new telephone lines, the printed billing service and joint operation schemes with private companies (KSO)," he said.
ICW began its investigation in February following protests over the company's decision to increase telephone rates in March by 15 percent for local calls and monthly fees by 10 percent for households and 15 percent for businesses.
"ICW suspected that there must be something wrong in the way Telkom was managed to have caused such a huge financial loss, which in the end burdened customers, who had to pay more to enable Telkom to get more money to fix its financial problems," he said.
Based on Telkom's financial report, the firm booked a net income of Rp 1.16 trillion in 1998, an increase of 1.4 percent over the Rp 1.15 trillion recorded in 1997, Teten said.
Telkom's long-term debts in the same period reached Rp 8.21 trillion. The debt consisted of a Rp 7.72 trillion debt to overseas banks and a Rp 494 billion debt to contractors, he said, adding that Telkom booked Rp 6.60 trillion in total operating revenue in the same period.
A member of ICW's working committee, Hayidrali Muhammad, said an indication of improper bidding was seen in the second STDI project.
"There are three vendors, AT&T, NEC and Siemens, and their local partners which have always dominated the bidding," he said.
The tenders on STDI projects always have been won by one of these three vendors: AT&T, with local partner PT Citra Lamtorogung, which is owned by the eldest daughter of former president Soeharto, Siti Hardiyanto Rukmana; the TIMSCO Group, or NEC, with local partners Humpuss Electronic, owned by Soeharto's youngest son, Hutomo "Tommy" Mandala Putra, and Bimantara, owned by Tommy's older brother, Bambang Trihatmodjo; or Siemens, with its unidentified local partners, he said.
"Another vendor, Ericsson, for example, once lost the bid on a switching procurement to NEC and AT&T despite offering a 50 percent cheaper price," Hayidrali said.
He said the investigation found Telkom made inaccurate judgments in the development of 1.7 million telephone lines in 1996, which led to a financial loss of trillions of rupiah.
Unsold
Many of the lines have never been sold because Telkom did not properly anticipate the support system, which was not ready at the time, or the weak market demand, he said.
The investigation also found the printed billing information service introduced in 1997 cost Telkom about Rp 5 billion a month, he said.
"If Telkom maintained its previous billing information service through the telephone, it could have collected around Rp 200 million a month," Hayidrali said.
He said there were allegations of nepotism in the introduction of the printed billing system, saying the project was granted to a relative of one of Telkom's directors.
"However, this has not yet been proved. We have asked the director but he refused to comment," he said.
ICW said that the government should also reconsider Telkom's joint operation schemes with the private companies because it also brought financial loss to the company
Not true
Telkom spokesman Dodi Amirudin denied all of ICW's allegations.
"First of all, I'd like to emphasize that not even $1 of the total investment on the Telkom-1 satellite project was ever derived from foreign bank loans," he told The Jakarta Post on Thursday.
He criticized ICW for being inaccurate.
"Total investment for the satellite project is much lower than the $400 million they estimated. It's only $191.4 million and we have paid 80.5 percent of it," Dodi said.
He said Telkom did not consider the relatively high cost of the printed billing system a problem.
"It is an investment that we have to make in order to improve our overall service to our customers," he said.
On the bidding for the second STDI project and the KSO schemes, Dodi defended Telkom, saying the guidelines for the KSO schemes already were set by the government.
"The government named particular foreign partners to cooperate with us in developing the STDI," he said.
"As for the KSOs, we also were just executing what had been ruled by the government," he said, adding the joint cooperation had not yet satisfied Telkom's requirements. (cst)