Bambang Nurbianto, Jakarta – Collusion and corruption are still rampant in procurements of goods and services in nearly all units of the city administration.

A number of executives of goods and services suppliers to the city government said that collusion and corruption could take place both when firms were directly appointed to take charge of projects and when projects were put out to tender.

Because of such illegal practices, only around 50 percent of the total allocated funds was spent on procuring goods and services while the other 50 percent was embezzled by suppliers and the officials involved in the tender or direct appointment process.

"The officials involved in the procurement process can receive up to 35 percent of the total allocated funds," a director of a supply company, who spoke on condition of anonymity, told The Jakarta Post on Wednesday.

The source said the officials who usually took a cut included project leaders, members of tender committees (at least five persons), members of supervisory committees (at least five persons), and the heads of city government units.

He cited as an example a situation where the funds allocated for procuring equipment were Rp 100 million (US$11,000). Only Rp 50 million of this money would actually be used to buy the equipment while between Rp 35 million and Rp 40 million would go into the pockets of the officials involved. The rest would go to the supplier as an additional sweetener.

As the 2002 city budget reaches Rp 9.3 trillion, the goods and services procurement field involves a major amount of money. According to the source, the winners of tender competitions have usually already been decided on before the process begins.

Members of the tender committee or project leaders usually had set up their own men as the winners of the tender before the bidding even began. They also normally had already reached an agreement with their partners about the percentage of the allocated funds that each would receive.

The percentages received by project leaders or members of a tender committee ranged from 10 percent to 15 percent of the total funds allocated for the procurement. The money was usually given in cash through a "mediator" after the winning company had been decided.

The source said that not all the money went to the front-line officials as there were still the members of the supervisory committee, city government unit heads and other officials who also received a slice of the procurement pie. In order to give the impression that the tender process had complied with the rules, the "winning candidate" would normally seek six or seven front companies to take part in the bidding process. Those companies, however, would be aware all along that they were not going to win the tender.

"Such companies are happy if they receive Rp 200,000 each from the winning company in a case where only a small project is involved," said an executive of another supplier who is usually to be found hanging around outside City Hall on Jl. Medan Merdeka Selatan.

Neither is it difficult to find such front companies as dozens of their owners are always to be seen hanging around the City Hall's post office everyday.

Although they are legal, they are not like normal companies. These companies are, in fact, one-man shows with the owner acting both as director and secretary. Such companies usually have no permanent office while all documents and assets of the companies are kept in the owners' bags, which are taken everywhere they go for business.

The second source also said that such illegal practices did not only take place in procurements but also in other projects. And it was not only the city administration that was affected but central government departments as well.

Meanwhile, the city administration's Procurement and Storage Department director, Hamdi, denied that such illegal practices were still rampant in city procurements.

"I don't think this can happen given that all the processes are transparent. A tender involves many parties, including the supervisory committee. And the tenders are also announced in the newspapers," Hamdi said.

Hamdi is right to say that tenders are announced in newspapers, but only in carefully selected ones, namely those with small circulations. As an example, a project worth Rp 9 billion for fencing in the National Monument (Monas) park was only announced in the Sentana newspaper, which is unheard of by most Jakartans.