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Defense deptartment audit reveals many irregularities

Detik - June 23, 2000

Shinta NM Sinaga/FW & LM, Jakarta – The Supreme Audit Agency (BPK) has admitted that they have found many irregularities in their audit of the Ministry of Defense. While the Ministry has vowed to follow up the irregularities found, the Agency has stated that it is about to look into whether the information provided is accurate.

The audit, began just last week, found many administrative irregularities particularly regarding book-keeping practices as well as matters relating to the procurement goods through bidding or through direct deals with suppliers.

According to Gede Artjana, the head of the audit team, the Ministery is planning to clean up it's act. "The Ministry of Defense has promised to follow up this result," he told the press before meeting the President at his office today..

The audit covered various business ventures owned by the different branches of te Indonesian Armed Forces (TNI), including around 50 companies, as well as their foundations. According to Artjana, the Ministry of Defense currently owns two foundations which belong to the Indonesian Armed Forces headquarters, one foundation belonging to each of the military services (Army, Navy, Air Force), one foundation belonging to the Army Strategic Reserves (Kostrad) and one foundation belonging to the Army Special Forces (Kopassus).

The armed forces have had an active role in Indonesia's economy since the withdrawl of the Dutch in the 1940's and the businesses and foundations have since then provided funds for the military's development.

Last week the Minister, Juwono Sudarsono, defended their business interests. He argued that the official government budget, Rp 10.9 trillion (US$1.3 billion) in the nine month period till June representing 5.59 percent of the total state budget, was insufficent to support their operations and social programs. Juwono remarked that the state budget only covered 25 percent of minimum operational costs and that the additional nonbudgetary funds were needed to improve soldiers welfare.

In fact, Article 2 of Government Regulation No. 6/1974 clearly states that all military officers with a rank of lieutenant or higher, and their spouses, are prohibited to own or be connected with any businesses, unless official Presidential consent is given.

The Supreme Audit Agency estimates that the audit process will be completed by the end of July. "In the resulting report, we will also include recommendations which will be submitted to the House. We are currently examining whether the data provided by the Ministry of Defense is accurate or not," Artjana said. Artjana also made a point of stating that the Agency has met no resistance from the Ministry of Defense which has been very cooperative and open.

The audit is by no means the result of a new openness on the military's part but has come at the behest of the IMF which included in the Memorandum of Economic and Financial Policies signed on May 17 a passage which holds the BPK responsible for taking account of all extrabudgetary funding in it's audits of public institutions, including the military.

Meanwhile, Chief of the BPK, Satria Budi Hardjojoedono, reiterated that they are currently preparing to comprehensively audit nonbudgetary funds which have proven a lucrative source of funding for consecutive Indonesian governments. "We have started with the Ministry of Defense, the Military Services and National Police. The next step will be the central bank and Bulog (State Logistics Agency) until eventually, we will cover all public institutions," he said assertively.