Jakarta – The Indonesian Government's internal auditor has accused former President Soeharto and other government officials of receiving bribes from a consortium run by United States and Japanese companies to allow the construction of a power plant at an inflated cost.
In a report obtained by Dow Jones Newswires, the auditing agency also alleges that PT Paiton Energy, a consortium led by units of Edison Mission Energy of the US and Mitsui & Co (MITSY) of Japan, inflated its costs by up to $US600 million ($937 million) so it could sell electricity to a government company at an artificially high price.
"We allege there were inappropriate payments by the consortium, which related to the finalisation of the negotiation process, to certain people who had the authority to make decisions," the audit agency said in a report on the $US2.45 billion Paiton I power plant in East Java.
Paiton Energy is 40 per cent owned by Edison Mission Energy of the US, while Mitsui has a 32.5 per cent stake. General Electric's GE Capital unit holds 12.5 per cent of the company. The local partner of the project is PT Batu Hitam Perkasa, which owns the remaining 15 per cent.
Batu Hitam is controlled by Hashim Djojohadikusumo, a brother-in-law of former President Soeharto's daughter, Siti Hediati Prabowo. Paiton I and other projects built by foreign independent power producers have been dogged by accusations of corruption since the fall of President Soeharto in 1998. Indonesia's State-owned electric utility, PT Perusahaan Listrik Negara, or PLN, sued Paiton I last year to void the power supply contract it signed with them in 1994, claiming the contract was based on elements of "corruption, collusion and nepotism". The companies have repeatedly denied any wrong-doing. The auditor's report was the first by a government body to review accusations against Paiton I and another 25 power projects. It recommends the Attorney-General investigate everyone involved in negotiating the contract but it is not clear what action the Attorney-General will take.
The auditor said its bribery allegation was based on the finding of $US22.23 million of funds listed as "Project Development Costs" in Paiton Energy's 1994 financial report. The auditor said it could not find any explanation of the item, although the amount accounted for more than half of the company's assets. The agency urged the Attorney-General to investigate bank accounts of government officials involved in negotiating the power project.