Telkom, Garuda clarify audit results

Telkom, Garuda clarify audit results

Tantri Yuliandini, The Jakarta Post, Jakarta

State-owned telecommunications firm PT Telkom and flagship
carrier PT Garuda Indonesia said on Monday that the condition of
their operations were much different now compared to the gloomy
picture painted by the release of independent audit results last
week.

The companies said that they had taken measures since last
year to improve efficiency and minimize losses.

Independent audits were conducted between 1995 and 1999 on
Telkom, Garuda and three other state enterprises as part of an
agreement between the government and the International Monetary
Fund. The audit results were made public last week.

The audit of Telkom, conducted by Amir Abadi Jusuf & Aryanto,
a member of RSM International, found efficiency losses amounting
to Rp 3.7 trillion (about US$352.4 million), potential losses of
Rp 1.8 trillion, and savings or profit losses of Rp 740.9
billion.

Meanwhile, the audit on Garuda by Hadi Sutanto & Partners, of
PriceWaterhouseCoopers, found efficiency losses amounting to
$1.62 billion, $698 million in potential losses and $147 million
in lost opportunities for savings or gains.

Telkom director of operations and marketing Komarudin
Sastrakoesoemah said on Monday that the results of the audit had
failed to take into consideration the economic situation at the
time, especially the impact of the 1997 economic crisis on the
company.

"Particularly regarding losses incurred from the joint
operation scheme (KSO), there was nothing else we could do at the
time. The economic crisis had forced us to revise down our
targets," he told a media conference here, explaining that
efficiency losses from the KSO were reported at Rp 1.1 trillion,
and Rp 1.3 trillion in potential loss.

Komarudin also said that the audit had failed to consider the
preferences of the Indonesian market and had instead taken the
benchmark from a market that could be vastly different to here.

As an example, he referred to the audit's claim that Telkom
had failed to optimize marketing for voice mail and call waiting
features, causing efficiency losses of Rp 46.9 billion and
savings or profit losses of Rp 8.7 billion.

"In advanced countries the two features are in high demand,
which is not true here where they're not so popular," Komarudin
said.

In a similar media conference late last week, Garuda president
Abdulgani said that, while the audit was a review of four years
of operations, the company had begun restructuring in the second
half of 1998.

"Since then, we have made advances toward corrective actions
and our operations have now improved significantly," he said.

Abdulgani also pointed out that from potential losses valued
at $698 million, some $578 million in taxes and excise was
currently being rectified with the Ministry of Finance.

Garuda's corrective measures include the closure of 17 flight
routes in 1998, staff cuts in 1998 and the return of uneconomical
leased planes in 1999.

The other three companies audited were PT Pelabuhan Indonesia
II, PT Jasa Marga and PT Perkebunan Nusantara IV. Jasa Marga will
publicly reveal its corrective measures on Wednesday.

The auditors found efficiency losses totaling Rp 8.5 trillion
and $1.62 billion, potential losses of Rp 7.35 trillion and $698
million, and savings or profit losses of Rp 776.02 billion, Rp
64.7 billion a year and $147 million.