The Pertamina expose

The Pertamina expose

Although in Jakarta it was an open secret that corruption was
rampant in state-owned oil company Pertamina during Soeharto's
32-year New Order regime, it still came as a shock, if not a
surprise, to many that the firm suffered a staggering US$6.1
billion in losses from corruption and gross inefficiency in the
past two years.

The finding, based on a recent independent audit by Price
Waterhouse Coopers, is all the more disturbing because a previous
audit by the Development Finance Comptroller, the state agency
assigned to audit state-owned companies, gave an "unqualified"
rating to the firm's financial reports for the period April 1996
through March 1998, meaning that no irregularities were
uncovered.

The public has the International Monetary Fund to thank for
bringing the losses to light. The independent audit, after all,
was part of the reform measures agreed upon between the
government and the fund as a precondition for its much needed
assistance.

In the meantime, the expose raises a few disturbing points.
First of all, $6.1 billion is no small amount of money,
especially in these crisis-ridden times. According to a report
released by the Central Bureau of Statistics last week, 49.5
million Indonesians, or 24.2 percent of the country's population,
lived in poverty at the end of 1998. The tidy sum of $6.1 billion
would have gone a long way in helping to better the lives of our
country's poor.

With living below the poverty line defined as monthly income
of Rp 96,959 or less for residents of urban areas and Rp 72,780
or less for rural dwellers, it would take about Rp
12,748,000,000, equivalent to about $1,902,686, to help almost 50
million poor Indonesians to subsist for a month. It takes simple
arithmetic to realize that $6.1 billion in stolen and squandered
money constitutes an obscene amount.

A second point raised by the recent audit findings is that if
the huge incidence of graft, incurred over a span of two years,
could have remained undetected in one state company but for a
change in circumstances, it would be disconcerting to think of
the total amount lost to corruption and inefficiency in all the
state companies over that same period. And one hardly dares
imagine the magnitude of the losses incurred through corruption
and inefficiency throughout the New Order's long rule.

In the final analysis, this case should serve as a strong
reminder of the urgency of a thorough cleanup in all our state
enterprises. At the same time, it is bound to ignite more
skepticism concerning the efficacy of our audit agencies. The
best of our analysts and experts have reminded us of the need to
put in order our state enterprises -- and warned of the risks and
dangers of failing to do so. Given the state of our business and
government agencies at present, it will be the honorable but
unenviable task of the new government to set the matter straight.