Pertamina chief vows to act firmly on auditor's findings

Pertamina chief vows to act firmly on auditor's findings

JAKARTA (JP): The president of state oil and gas company
Pertamina pledged on Monday to act firmly on an independent
auditor's recommendations to transform the state firm into an
efficient, transparent and accountable entity.

But Martiono Hadianto said he was unsure about the accuracy of
Price WaterhouseCoopers' report putting the firm's losses at
US$6.1 billion in the past two years due to corruption and gross
inefficiency. Excerpts from the report were quoted by several
media last week.

"I learned on Sunday that Price Waterhouse has still to submit
its final report to the finance minister on Tuesday," Martiono
said.

The executive summary from the special audit of Pertamina,
which was leaked to several media last week, disclosed that the
state company lost about $6.1 billion in the period from April 1,
1996, to March 31, 1998.

"The media reports were based on an unfinished audit document
that was leaked to the media by an ungentlemanly person," he
said.

He declined further comment on the substance of the findings
until he obtained a copy of the final audit report from the
finance minister.

Auditors, Martiono added, will give the final report to the
party which hired them, in this case the Ministry of Finance.

Through an open tender last December, the ministry appointed
Price Waterhouse to conduct the special audit of Pertamina's
performance as part of the reform program agreed on by the
government and the International Monetary Fund.

Price Waterhouse sent an executive summary of its draft report
to the finance ministry's director general of financial
institutions on June 14.

The report concluded that Pertamina incurred significant
losses in procurement transactions due to elements of corruption,
collusion and nepotism. It said many contracts were conducted on
a basis that lacked sound economic rationale.

It also found corruption entrenched in all Pertamina
directorates.

Auditors said they discovered $2.4 billion in losses incurred
at Pertamina's head office, $2.19 billion at its exploration and
production directorate, $328 million at its processing
directorate, $129 million at the foreign contractors management
body and $380 million at its shipping and communications
directorates.

Martiono commended his staff for cooperating fully and
providing all requested data to Price Waterhouse in conducting
the audit.

"Without our full support, the auditors would not be able to
obtain maximum information to conduct a reliable audit," he
added.

"I personally instructed all the staff to cooperate with the
auditors and give all the necessary data to the auditors."

Separately, a former senior Pertamina official believed the
auditor's findings showed inconsistencies.

He said the firm conducted an audit of Pertamina in the past
and found no wrongdoing, even though the state oil company was
infested with corruption, collusion and nepotism since the early
1970s.

"The foreign auditor, in the case of big clients such as
Pertamina, appears bent on satisfying the aspirations of the
party it is auditing, or the party it received the audit order
from," added the official, who spoke on the condition of
anonymity.

"At least the aspirations within Pertamina and the government
now seem to be to bare all the collusive businesses of former
president Soeharto and his family. Price Waterhouse, in fact, has
reflected those aspirations in its latest special audit report on
Pertamina," the official added.(udi)