Mismanaged state assets sources of corruption

Mismanaged state assets sources of corruption

Ridwan Max Sijabat, The Jakarta Post, Jakarta

Take a sightseeing trip in any major city or other urban area and
you will perhaps find on a piece of deserted land or unoccupied
buildings placards reading, "Tanah ini milik Depsos" (this land
belongs to the Social Affairs Ministry), "Tanah ini milik
Kostrad" (this land belongs to the Army's Strategic Reserves
Command), or "Gedung kosong ini milik Dinas Pertambangan" (this
deserted building belongs to the local mining and energy ministry
office).

A question will immediately spring to mind: Do such state assets
belong to government offices and do the latter have the right to sell
state assets to third parties?

The Indonesian Air Force had already sold its headquarters,
located at a strategic site on Jl. Gatot Subroto, Jakarta, to the
private sector before it moved to Cilangkap several years ago.
The police in Bandung, West Java, are still negotiating with a
holding group on the ruislag (sale) of personnel accommodation in
a strategic location in the city. The Medan, North Sumatra,
military plans to sell a barracks in Padang Bulan in the city,
occupied by cavalry personnel, to a noted businessman.

A local military official said the planned sale of the cavalry
barracks had won approval from the Indonesian Military leadership
and the finance minister. He argued that the funds from the sale
would be used to purchase a larger site on the city's outskirts
on which a larger barracks would be constructed to accommodate
more cavalry personnel. But he declined to say for how much the
barracks was sold and how it would appear in accounts.

Sri Sumantri, a professor of constitutional law at Jayabaya
University, criticized the government for having mismanaged
(fixed) state assets such as land and construction, saying the
government and military could not claim the state assets as their
own.

"In this case, both the state and government must be separated
in term of functions or the government should not take over the
functions of the state. The government is only the user; it must
be open about the accountability of state assets and cannot sell
them to third parties without the approval of the House of
Representatives," he told The Jakarta Post.

Sri emphasized that the issue had to be brought out into the
open, especially in view of the recent controversy over the award
by President Megawati Soekarnoputri of a US$1.3 billion real
estate project at state-owned Kemayoran township, Central
Jakarta.

"The questions are why the management of a state asset and of
the Senayan sports complex have been handled by the state
secretary; does he have authority to rent it to a private third
party, ie. PT Theda Nusantara Persada (TPN), controlled by the
President's eldest son?" he asked.

The Supreme Audit Agency (BPK) has discovered irregularities
at the State Secretariat with regard to mismanagement of the two
plots of land in 2000 and 2001, but so far State Secretary
Bambang Kesowo has denied any wrongdoing concerning the
management of state assets or the awarding of the project to a
member of the President's family.

The House of Representatives once investigated alleged
irregularities when the President provided Rp 30 billion in
presidential aid that was raised from government income from the
Senayan compound, to rehabilitate police and military barracks in
January, 2002.

Abdul Muis, executive director of the Kemayoran New Town
Authority (DPPPKK) has conceded that the former international
airport site has belonged to the state since 1985 but nothing
from the site's rental income has been handed over to the state.

"DPPPKK's annual income has been used to cover our annual
budget and develop the area to become a center of information and
an international exhibition center, as stipulated in the Jakarta
Spatial Zoning plan," he said.

Arifin Soeria Atmadja, a professor of state administrative law
at the University of Indonesia, concurred, saying that fixed
state assets have been a source of corruption for government
officials, as they have been badly mismanaged.

"Certain officials, in the name of their institutions, have
taken personal financial advantage from such deals, including the
ruislag and land lending, which are really against the Dutch
Indonesisch Comptabiliteitswet (ICW), still effective in the
country," he said.

He said state institutions and government offices had no
ownership rights over the land or buildings they utilized.

"According to the law, they have authority to utilize land and
buildings provided by the state but they have no rights and
authority to sell them to third parties. If they no longer need
the assets they should return them to the state," he said, citing
as an example that state assets in the U.S. are managed and
procured by the general accounting body.

"If the government wants to lend or sell state assets to third
parties this, according ICW, must gain approval from the
volkskrad (House of Representatives). Thus, state asset sales are
against ICW because they did not gain approval from the House,"
he said.

He added that so far no data existed on fixed state assets.

Sri and Arifin hailed the treasury bill that the government
has already submitted to the House to allow for more transparent
management of state assets.

They said it was the legislative right of the House to decide
who or which agency should manage state assets. "If the House
decides to entrust the authority to the finance ministry, as
stipulated by the bill, it has a legal basis because the finance
minister has an obligation to produce an annual balance sheet of
state assets," said Arifin.

Abdul Muis also supported the two experts' other alternative
-- to request state universities, rather than state
institutions, conduct an indepth study to produce recommendations
on how state assets should be managed.