Markus Junianto Sihaloho – Two state-owned contractors responsible for renovating legislators' homes may have pocketed 80 percent of the project fund, thus leading to substandard construction, according to claims from a former subcontractor.
The project to refurbish and build new homes in South Jakarta for members of the House of Representatives has long been dogged by allegations of cost markups. Legislators refused to move in because of what they called was poor workmanship and use of substandard materials in the homes.
On Sunday, a subcontractor who asked to be identified only as SL and claimed to be from construction company MIM, said his firm had been appointed to carry out the renovation by state-owned contractor Pembangunan Perumahan.
He said that in September 2009, he had been ordered to start the job without having signed any contracts. A contract was finally signed on Oct. 16, 2009, but PP did not make any down payment, as required by the contract, SL said.
As a result, his company and the eight other appointed subcontractors were forced to get loans from a bank "that was cooperating with PP staff." "They were more like brokers," he told the Jakarta Globe.
He also said it was only halfway through the project that he became aware that PP was not the main contractor for the project, but had itself been subcontracted by Adhi Karya, another state-owned builder.
He said the House, in awarding the contract to Adhi Karya, had budgeted around Rp 700 million to Rp 900 million ($77,700 to $100,000) per home – far more than the Rp 152.5 million per home stipulated in PP's contract with MIM. SL added that almost all the materials for the construction were provided by PP, while the subcontractors were only allowed to provide sand and bricks.
"They even chose the cement, the Tiga Roda brand," he said. "So now, if the legislators are complaining about the poor quality of the building material, we're not to blame. It was PP that provided it all."
SL also said that whenever members of the House's Household Affairs Committee (BURT) made site inspections, the PP staff would order the subcontractors to tell the inspectors that they were from Adhi Karya.
He said that while he was aware that this cover-up might have been illegal, he said the subcontractors had no choice but to proceed with the renovations because they had already signed the contract with PP. "I was just hoping to earn back the money I'd already spent."
After frequent complaints to PP, SL said that MIM and the other subcontractors finally decided to break their contract in February last year. Of the Rp 152.5 million per house that he should have received from the project, SL said his company only got around Rp 120 million for each.
"PP then subcontracted the project again, and we heard they used the same work pattern," he said. "So it's no wonder there are so many complaints now about the finished product."
The Indonesian Forum for Budget Transparency (Fitra) has also said PP had subcontracted the project to nine firms for around Rp 152 million per house. However, it said PP had itself received a Rp 135 billion subcontract from Adhi Karya, or about Rp 619 million per House.
Adhi Karya's contract with the House was even bigger – an initial Rp 445 billion plus an additional Rp 34 billion.
Fitra has since requested a probe by the Corruption Eradication Commission (KPK) into the budget differences at each subcontracting stage.
Last week, House Deputy Speaker Anis Matta said the Supreme Audit Agency (BPK) was looking into whether the building specifications in the contract with Adhi Karya had been met. "If they haven't, we should refuse the homes," he said.