Ronna Nirmala – Jakarta provincial prosecutors are probing the alleged sale of public assets by the two private companies that operate Jakarta's piped water system.

French-owned Palyja is suspected of selling Rp 4.3 billion ($473,000) in assets belonging to public water authority PAM Jaya and pocketing the proceeds. Aetra, which is run by a consortium based in Singapore, sold assets worth Rp 3.2 billion, although those funds were later returned to PAM Jaya.

Suhendra, a spokesman for the Jakarta public prosecutor's office, said the case had been upgraded to a full criminal inquiry.

The assets sold are understood to be motorbikes and cars that were deemed beyond their useful life. They were sold in the years since 2003. The sale was detected by the Supreme Audit Agency (BPK) during an audit of Palyja's accounts from 2003 to 2007.

The BPK said the income from the sale of the used vehicles was not returned to the public institution PAM Jaya and was instead recorded as profits for the private operator. "We are going to probe further into this, to see who was responsible for the transfer of these assets in the form of a large number of vehicles," Suhendra said.

His colleague, special crimes assistant prosecutor Aditya Warman, said that because there were suspicions of losses to the state, their office would likely use the Anti-Corruption Law to prosecute any wrongdoing.

Palyja denies any wrongdoing. "I will say again that the sale of moveable assets by Palyja was done according to our contract," Palyja's head of corporate communications, Meyritha Maryanie, said on Monday.

Meanwhile, the Ministry for Public Works said that the PAM Jaya assets should have stayed in public hands. "If a private partner sells any public assets, [the proceeds] must be returned to PAM Jaya," said Rachmat Karnadi, a ministry official responsible for drinking water supply.