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)