Telkom denies forensic audit results

Telkom denies forensic audit results

Tantri Yuliandini, The Jakarta Post, Jakarta

State-owned telco PT Telkom denied on Wednesday ever having
giving authorization for PriceWaterhouseCoopers (PwC) to launch a
forensic audit of the telecommunications regions of West Java and
Banten following the alleged misappropriation of billions of
rupiah due to mismanagement.

Telkom said that although it and its joint operation (KSO)
partner AriaWest International had appointed PwC to conduct the
forensic audit, they had never discussed the schedule and scope
of the forensic audit.

Therefore, the findings of the PwC audit were "invalid" and
that the audit results were "not reliable".

"Telkom has numerous objections to the audit. It was not
independent. It was flawed. Telkom was cut out of the process,"
Telkom's director of operations and marketing Komarudin
Sastrakoesoemah said in a statement.

Earlier, the Koran Tempo daily reported that PwC had found
that between Rp 600 billion (about US$59 million) and Rp 700
billion in revenue had gone missing from the telecommunications
regions operated by AriaWest.

The telecommunications regions of West Java and Banten were
given to AriaWest to manage in 1996 under a joint operation (KSO)
agreement with Telkom.

The collaborative venture backfired when the lucrative
business no longer looked profitable on the back of the economic
crisis in late 1997, and the relationship between the two
companies began to sour.

In March this year, AriaWest released a preliminary report on
the PwC audit which indicated problems with fraud and
mismanagement on the part of Telkom employees in the West Java
and Banten regions.

This report was also denied by Telkom at the time for the same
reason, namely that the forensic audit had not been authorized.

Komarudin said that Telkom had submitted its objections to the
audit to the International Chamber of Commerce (ICC) in Geneva,
and that it had appointed its own accounting firm to review the
results of the PwC audit and to conduct its own forensic audit of
the telecoms regions.