Indonesia - More Indonesian SOE bosses in jail raises concerns

The conviction of the former president director of PT Perusahaan Listrik Negara (PLN), Eddie Widiono Suwondho, on Wednesday has added to a long list of Indonesia's state-owned enterprises (SOE) bosses ending up in jail for graft.

While SOEs are generally in better shape and more profitable nowadays than in the past, there seems to be no end in sight to the number of graft cases involving company executives.

There are now at least seven more corruption cases under investigation involving former SOE president directors, with the latest being against former state airline Merpati Nusantara boss Hotasi Nababan by the Attorney General’s Office.

But Eddie’s case is one of the high-profile ones, as PLN is the country’s second-largest state company by assets after Bank Mandiri, with annual capital expenditure worth more than US$3 billion.

As the longest-serving PLN president director, from 2001 until 2008, Eddie is known to have close ties with the inner-circles of former president Megawati Soekarnoputri, and former vice president Jusuf Kalla.

The court sentenced Eddie to five years’ imprisonment for a corruption case that centered on an outsourcing procurement project for the construction of customer information systems in Jakarta and Tangerang, Banten.

Eddie’s order to directly appoint PT Netway Utama to handle the project was proven to have caused Rp 46 billion (US$5.01 million) in state losses.

“My decision to endorse Netway was considered against the law, but actually the project benefited both customers and PLN,” he said.

The court, however, failed to uncover the flow of the embezzled money, and Eddie was not proven guilty by the court of accepting Rp 2 billion in kickbacks for a procurement project. Nor was it proved that he had used travelers’ checks worth Rp 850 million.

Indonesia Corruption Watch (ICW) activist Emerson Yuntho suspected Eddie of protecting certain high-profile figures.

“There’s no such thing as a free lunch,” he said. “There must have been a deal or other benefits behind it,” he said.

Graft cases at state companies usually occurred as a result of political pressures.

For more than three decades, the ruling political elites, along with their families and cronies, largely fed on SOEs to secure their positions in power.

Critics have repeatedly said SOEs will remain a cash cow to ruling politicians because of election costs that are unusually high. No one can offer subtle loyalty in the form of campaign funding like SOE executives, who are also vying to remain in power.

Former president director of state gas company PT Perusahaan Gas Negara WMP Simanjuntak, who was convicted for graft in 2010, said during his trial the amassed money was distributed to several Golkar politicians in late 2003.

Former financial director of state agribusiness firm PT Rajawali Nusantara Indonesia (RNI) Ranendra Dangin also referred in his trial in 2006 to the flow of graft money to politicians from the Indonesian Democratic Party for Struggle (PDI-P).

Due to the rampant corruption, the performance of SOEs often remains below that of their counterparts in the private sector, despite being granted various privileges.

There are currently 141 state companies with combined assets worth more than Rp 2,510 trillion (US$278 billion) and revenue of more than Rp 1,150 trillion.

Indonesia Transparency Society member Jamil Mubarok said the jailing of dozens of SOE bosses for graft would not deter serving SOE executives from committing the same crimes.

“They may not learn from their convicted colleagues, as the selection process for SOE top executives is marred by political motivations, rather than being based on performance. The executives feel safe because they have backup from powerful political figures,” he said.

Ina Parlina

The Jakarta Post

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