Windarto, Herman, Jakarta – The Supreme Audit Agency (BPK) has uncovered several issues and fraudulent activities within the ailing state-owned pharmaceutical company Indofarma (INAF) and its subsidiary, Indofarma Global Medika (IGM).
One of the notable findings includes the use of employees' names to secure online loans amounting to Rp 1.26 billion ($77,000). The BPK's investigation revealed that these loans were taken through fintech companies for purposes unrelated to the company.
Indofarma's CEO, Yeliandriani, said the fraudulent activities involved five employees who held significant authority within the company. These employees have since left the company. The incidents occurred before Yeliandriani assumed her role as CEO.
"The online loan issue reported was indeed a loan taken from fintech companies in 2022, but it was repaid within a few months," Yeliandriani stated during a hearing with Commission VI of the Indonesian House of Representatives on Wednesday.
"The company took out online loans using the names of employees. It was a significant and bold fraud within Indofarma," she said.
However, the employees' names were not disclosed during the hearing as the investigation is still ongoing.
The online loan issue is just a small part of the problems faced by Indofarma. The BPK also identified several other financial mismanagement activities and fictitious sales within IGM, the company's fast-moving consumer goods (FMCG) unit, resulting in losses of Rp 278.42 billion and potential losses of Rp 18.26 billion due to tax liabilities.
Additionally, the BPK found losses amounting to Rp 16.35 billion and potential losses of Rp 146.57 billion, consisting of bad debts totaling Rp 122.93 billion and unsellable inventory worth Rp 23.64 billion.
Other detrimental activities included placing personal deposits in a cooperative, Koperasi Simpan Pinjam Nusantara (Kopnus), pledging deposits at Bank Oke for the benefit of others, and holding tax restitution funds in undisclosed bank accounts for non-company purposes.
The BPK also found misuse of company credit cards for personal expenses, personal credit card/operational payments, financial report manipulation (window dressing), and overpayments for post-employment insurance.
In response to these issues, the BPK recommended that Indofarma's Board of Directors report these matters to shareholders. The BPK also urged Indofarma's directors to coordinate with shareholders and the State-Owned Enterprises Ministry to report the company's problems and those of its subsidiary to law enforcement agencies.
The BPK further identified potential losses incurred by Indofarma and IGM in the procurement of medical equipment without feasibility studies and sales without customer financial capability analysis. This included items such as teleCTG, masks, PCR tests, rapid tests (Panbio), and isolation transportation. These activities resulted in an indicated loss of Rp 16.35 billion and potential losses of Rp 146.57 billion, comprising bad debts totaling Rp 122.93 billion and unsellable inventory worth Rp 23.64 billion.
Arya Sinulingga, Special Staff to the State-Owned Enterprises Minister, revealed that the root of the alleged financial mismanagement fraud at Indofarma stemmed from IGM's failure to remit proceeds from product distribution.
IGM is responsible for distributing Indofarma's products. According to Arya, invoices amounting to Rp 470 billion for products distributed to third parties were never remitted to Indofarma, disrupting financial management.
"It was found that Rp 470 billion, which should have been received by Indofarma, was not remitted by Indofarma Global Medika," Arya stated in May.
Arya explained that all distributors had paid their invoices to Indofarma Global Medika. However, these payments were never forwarded to Indofarma.
Arya further noted that the unpaid invoices caused Indofarma to struggle with employee salary payments since March 2024.
Previously, Indofarma's employee salaries were funded by Bio Farma, its parent company. Arya mentioned that Bio Farma had disbursed hundreds of billions of rupiahs.
"This support is now limited, resulting in delayed salary payments. If Bio Farma continues to provide funds, it would negatively impact Bio Farma," Arya concluded.