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Ghalib says Tommy's Timor car nepotistic

Jakarta Post - December 8, 1998

Jakarta – Attorney General Andi M. Ghalib described the former president Soeharto's national car program, entrusted to his own son Hutomo Mandala Putra, as a graft-infested project designed entirely for self-profit.

Ghalib said in a statement distributed to members of the House of Representatives on Monday that the national car project, run by Hutomo's firm. PT Timor Putra Nasional, had caused the country losses of US$ 1.55 billion.

"The national car program stipulated in Presidential Decree No. 42/1996 was a program of nepotism because it was designed solely to profit the family," he said.

Ghalib said the issuance of the presidential decree and regulations backing the projects were made possible merely through collusion between Hutomo and related government officials.

The officials misused their authority, opportunities and facilities given to them because of their rank and position, he said, adding that the scheme could lead to corruption proceedings in a criminal court.

Ghalib is scheduled to summon on Tuesday former industry and trade minister Tunky Ariwibowo, who issued the ministerial decree in Feb. 1996 authorizing Timor to carry out the national car project.

Timor was the sole recipient of an import duty and luxury tax exemption from late 1996 to January 1998 when the International Monetary Fund insisted Indonesia stop the preferential treatment. The tax exemption made the car 60 percent cheaper than its counterparts on the domestic market.

Timor was supposed to increase its local content by 20 percent annually until it reached 60 percent in the third year. In the first year, it was allowed to import all the originally Sephia cars from South Korea's Kia Motors Corp. without paying the taxes.

Ghalib said the Timor project cost $1.0 5 billion in losses to the government from exempted luxury tax and import duty of the imported Timor cars. To make up some of this loss the government has demanded that Timor repay Rp 3.39 trillion ($425 million) for the exempted import duties on some 39,000 imported Timor cars.

In addition to the unpaid taxes, the state had also suffered $500 million in losses from syndicated bank loans given by 13 state and private banks to finance Timor's manufacturing plant, Ghalib said.

Development and Finance Comptroller (BPKP) Chairman Soedarjono said the government had suffered Rp 176 trillion in losses from graft practices in the first semester of the current fiscal year that began on April 1, 1998.

Some Rp 219 billion and $205.48 million of the total were categorized as criminal offenses and therefore could be recouped through criminal proceedings and the perpetrators could face corruption charges, Soedarjono told House's Commission II for public administration.

Soedarjono said the comptroller also suspected that 69 out of some 2,000 presidential decrees issued during Soeharto's seven presidential terms might be tainted with corruption, collusion and nepotism.

Most of the problem presidential decrees were issued during his 1993/1998 term of office. The comptroller, however would only evaluate 37 of the 6 9 decrees for the time being due to their urgency, he said.

Soedarjono said that since Soeharto was forced to step down and replaced by his vice president B.J. Habibie in May, it had become easier for the comptroller to investigate graft. He said "The reform era really helps our auditing job. Those who want to intervene are deterred now," he said.