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Tuesday, February 14, 2006

Corruption probe 'deters' investment at SOEs

The ongoing investigations into a number of top executives at state-owned enterprises (SOEs) for their alleged roles in corruption cases have affected the performance of the SOEs, as other officials are now afraid to make corporate decisions for fear of being charged with corruption in the future, a minister claims.

Executives from telecommunications firm PT Telkom, Bank Mandiri, and power utility PT PLN have put investment plans on hold as a result of the graft probes, State Minister for State Enterprises Sugiharto said Monday.

"Previously, SOE officials would go all out for projects. But now, none of them are willing to handle projects as they are afraid of being investigated by the authorities in the future," said Sugiharto at the presidential palace.

He explained that there were a huge number of planned capital expenditure projects that were unlikely to be acted upon during the first quarter of this year, thus slowing down the expansion of the SOEs.

The National Police recently questioned PLN president Eddie Widiono and finance director Parno Isworo (for now, in their capacities as witnesses) in connection with a Rp 122 billion (US$13.1 million) corruption scandal at the company. The police have thus far detained the company's director for power and primary energy, Ali Herman Ibrahim, and his deputy, Agus Darmadi, over the case.

The case began when the Supreme Audit Agency found irregularities in the purchase of two generators installed at the Borang gas-fired power plant to provide additional power for the 16th National Games in Palembang, South Sumatra.

Meanwhile, the West Java Police have detained Telkom's human resources and internal affairs director, John Welly, for alleged corruption involving the provision of Voice over Internet Protocol facilities.

Sugiharto said his office would send representatives out to visit the companies and explain to the executives that as long as they complied with the law and principles of good corporate governance, they would have nothing to fear.

"If they do no wrong and comply with the regulations, there should be no reason for slowing down their companies' investment plans. That would only reduce the earnings of the companies," he said.

Rendi Akhmad Witular,
The Jakarta Post, Jakarta

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