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State-owned enterprises under scrutiny for corruption allegations

Jakarta Globe - May 23, 2024

Djibril Muhammad, Jakarta – Several state-owned enterprises (SOEs) are currently under investigation as two law enforcement agencies probe allegations of corruption.

The Corruption Eradication Commission (KPK) is looking into suspected fictitious procurement at telecommunications giant Telkom Group. The alleged corruption is believed to have led to financial losses amounting to hundreds of billions of rupiah for the state. Meanwhile, the Attorney General's Office (AGO) is investigating fraud allegations at pharmaceutical company Indofarma and pension fund Taspen.

"Currently, the KPK is gathering evidence to uncover allegations of corruption in the procurement of goods and services at Telkom Group," stated KPK spokesman Ali Fikri at the KPK headquarters in Jakarta on Tuesday.

"This procurement is suspected to be fictitious, involving the unlawful expenditure of state funds, with preliminary estimates reaching hundreds of billions of rupiah," Fikri continued.

While the KPK has named several individuals as suspects in this case, their identities and case details have not been officially disclosed.

"KPK will announce the complete list of individuals designated as suspects, the case structure, and the charges when the investigative team determines that the evidence is sufficient," explained Fikri.

Meanwhile, Telkom, a publicly-listed company, has expressed respect and support for the ongoing efforts to address the alleged corruption.

"This investigation follows management findings from internal audits conducted by the company," said Telkom's VP of Corporate Communication, Andri Herawan Sasoko, in a statement in Jakarta on Wednesday.

Sasoko emphasized Telkom's commitment to transparency and cooperation with the legal process, aligning with good corporate governance (GCG) principles and SOE clean-up initiatives.

"The ongoing legal process has not impacted the company's business operations and performance," Sasoko asserted.

Indofarma & Taspen

The AGO is also gearing up to investigate irregularities (fraud) at Indofarma, with initial findings provided by the Supreme Audit Agency (BPK).

On Monday, the BPK handed over the investigative audit report on the financial management of Indofarma, its subsidiaries, and related agencies for the years 2020 to 2023 to the AGO.

The BPK uncovered indications of criminal actions by related parties in Indofarma's financial management, leading to an indication of state losses totaling Rp 371.83 billion.

Arya Sinulingga, Special Staff III to the SOEs Minister Erick Thohir, revealed the alleged root cause of financial mismanagement at Indofarma, pointing to subsidiary Indofarma Global Medika, which reportedly failed to remit proceeds from product distribution.

Indofarma Global Medika, a Biofarma subsidiary tasked with product distribution, allegedly did not remit Rp 470 billion in proceeds to Indofarma, disrupting financial management.

Based on audit results, all distributors reportedly paid their bills to Indofarma Global Medika, but the funds never reached Indofarma, leading to salary payment difficulties since March 2024.

Meanwhile, pension fund Taspen is also under KPK investigation for alleged fictitious investments, with the KPK awaiting final calculations of state financial losses.

The value of Taspen's investments under scrutiny by the KPK totals Rp 1 trillion, with initial data suggesting state financial losses of hundreds of billions of rupiah.

"The final conclusion lies with the institution responsible for calculating state financial losses, whether it be the BPK or the BPKP, or even forensic audits by the KPK itself, determining whether the total loss is Rp 1 trillion or possibly less," said KPK spokesperson Ali Fikri on May 9.

Fikri noted that the KPK continues to investigate the allegations of fictitious investments and has obtained statements from several witnesses, including the suspended CEO of Taspen, Antonius NS (ANS) Kosasih.

Source: https://jakartaglobe.id/news/stateowned-enterprises-under-scrutiny-for-corruption-allegation