VP family firm to come under spotlight

VP family firm to come under spotlight

Rendi A. Witular, The Jakarta Post, Jakarta

With the Supreme Audit Agency (BPK) planning to review past
audits on investment irregularities at state social security firm
PT Jamsostek, a company owned by the family of Vice President
Jusuf Kalla is likely to come under close scrutiny.

BPK chairman Anwar Nasution said on Thursday that the agency
would look into past irregularities in Jamsostek, including
an investment worth Rp 200 billion (US$21.2 million) in NV Hadji
Kalla, a family firm owned by Kalla.

"We are definitely going to review past cases in Jamsostek
that may involve corruption, including the investment in NV Hadji
Kalla... I am assuredly not afraid to investigate this," said
Anwar during a joint press briefing with prosecutors, police and
officials from the Corruption Eradication Commission (KPK).

Anwar said if the review led to indications of corruption, the
agency would not hesitate to forward the results to either the
prosecutors, police or KPK.

In its audit report for the first semester of 2003, the BPK
stated that Hadji Kalla offered medium-term notes (MTNs) to
Jamsostek, which had a high risk of default due to some
irregularities.

Questions about the MTNs apparently began when Hadji Kalla
issued a four-year Rp 200 billion note to Jamsostek in April 2002
in a bid to raise cash to help finance the purchase of a firm
called PT Bukaka Telekomindo International (BTI) from publicly
listed PT Bukaka Teknik Utama (BTU).

The BPK said the collateral for the MTNs, which took the form
of land handed over by Hadji Kalla to Jamsostek, turned out to be
subject to legal problems, and could not be immediately redeemed
by Jamsostek if the firm defaulted on the MTNs.

Another possible irregularity involved the fact that there was
actually no evidence that Hadji Kalla had used the proceeds from
the MTNs to acquire BTI, as stated in the agreement with
Jamsostek that was signed before the issuing of the MTNs.

The Vice President had previously denied the allegations,
saying there were no irregularities in the issue and that his
company had already redeemed half of the MTNs purchased by
Jamsostek.

As requested by President Susilo Bambang Yudhoyono,
prosecutors and police are currently focusing on investigating
corruption in Jamsostek, which manages workers' funds worth over
Rp 32 trillion.

The first case being investigated in Jamsostek is the firm's
MTNs investment of Rp 103 billion in the now-defunct Bank Global,
which contained sufficient indications of collusion by the
Jamsostek directors in making the decision to invest in the
instruments.

Jamsostek is among five government institutions at the top of
the list for investigation by the newly established government
anticorruption team -- consisting of officials from the Attorney
General's Office, National Police and the Development Finance
Comptroller (BPKP).

The five institutions, which allegedly have misused state
funds amounting to some Rp 3 trillion, consist of three state
enterprises and two ministries dealing with public welfare.

Deputy Attorney General for Special Crimes Hendarman Supandji
said he was not afraid to probe a firm belonging to a senior
government official as long as there was sufficient prima facie
evidence of graft.

"We have to wait for the BPK to review its audit on the firm
(Hadji Kalla) before we investigate the case further," he said.

Aside from Hadji Kalla, the prosecutors are currently looking
into alleged irregularities in the extending of loans by
troubled Bank Mandiri to cement firm PT Semen Bosowa Maros, which
is owned by Kalla's nephew.