Mismanagement, corruption cost Garuda $1b: ICW
JAKARTA (JP): Mismanagement and corruption have caused state- owned flag carrier Garuda Indonesia to lose at least US$1 billion, Indonesia Corruption Watch (ICW) say.
The watchdog said on Tuesday that indications of mismanagement, corruption and collusion were found in the leasing of the airline's aircraft and aircraft maintenance projects dating back to 1989.
"Garuda has been weighed down by huge debt problems, most of which have been caused by the projects," ICW said in a statement distributed during a hearing session between Garuda management and members of House Commission IV for transportation and infrastructure affairs.
The projects are the leasing of four Airbus A330-300s from a joint venture between Japanese firm Yamasa Corporation and consortium of banks led by Morgan Grenfell; the leasing of two Boeing B747-200 jets from the Japan Fleet Service; the leasing of a Boeing B747-400 from the International Lease Financing Corporation; and a maintenance agreement on 17 Fokker F-28s with the other state-owned air carrier Merpati Nusantara and private firm PT Sakanusa Dirgantara.
ICW said that corruption in the Yamasa and Morgan Grenfell-led leasing project started in 1989 when Garuda, under the leadership of the then company president Soeparno, decided to lease nine Boeing B300-300s without performing proper feasibility studies.
ICW alleged that some Garuda officials colluded with representatives of the two lessor companies to mark up the leasing contract so that Garuda had to pay more, inflicting loses of about $1 billion in the process.
It said the mark-up of the contract value and collusion by Garuda officials the company lost at least $26.8 million from the leasing of two Boeing B747-200s, $42.5 million from the leasing of Boeing 747-400 and $7.1 million from the Fokker maintenance project.
"There is adequate proof of corruption and collusion conducted by Garuda officials along with accomplices from companies with whom Garuda made contract agreements," ICW said, naming former head of company asset supervisor Capt. Agus Wahyudo as one of the Garuda officials implicated in the corruption.
Some members of the House Commission IV demanded Garuda management investigate the incidents of corruption and dismiss officials involved in them.
Garuda's president Abdul Gani said he would form a team to investigate the cases.
He did not deny the truth of ICW's accusations, saying there was a possibility that bad practices had occurred in the projects.
He said that the company had been trying to sort out past projects that were tainted with corruption. Garuda has submitted data and documents about eight projects to the Attorney General's office, including the maintenance agreement with Merpati and PT Sakanusa as mentioned by ICW, that were carried out in a corrupt and collusive manner, he said.
"But we apologize if we cannot sort out all the cases of corruption and collusion at once, because our main focus over the last couple of years has been solving problems related to negative cash flow and debt restructuring," he told the commission members.
Gani said Garuda had to focus its attention on cash flow improvement and debt settlement in order to keep the airline alive amid the bad financial performances it had seen for years.
He said Garuda had been in the red for the last 10 years and had only been able to return to the black last year when it recorded a net profit of Rp 617 billion.
Company finance director Emirsyah Satar said Garuda had seen better results so far this year, with first quarter net profit amounting to Rp 29 billion, as against a projected Rp 116 billion net loss.
He said as of end of March this year Garuda had recorded Rp 21.3 billion in operating profits, also well above the predicted figure of Rp 27.7 billion in operating losses.
Emirsyah said Garuda expected to book 2000 full-year net profits of Rp 668 billion. (cst)