Pertamina to Spearhead Indonesian Antigraft Pilot Project

Jakarta Globe, Faisal Maliki Baskoro | August 09, 2010

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Jakarta. An antigraft pilot project is being set up at state-owned energy firm Pertamina, as part of the ongoing effort to combat state corruption.

The move is an initiative of the State Enterprises Ministry and the Corruption Eradication Commission (KPK). If the project succeeds, the agencies hope to establish antigraft units at all state-owned firms.

“We chose Pertamina for this project because of the magnitude and complexity of its business,” State Enterprises Minister Mustafa Abubakar said on Monday.

Pertamina is the nation’s main supplier of fuel and it’s biggest dividend payer. It is expected to record Rp 25 trillion ($2.8 billion) in profit this year, with 50 percent paid as dividends to the state.

Mustafa said the unit, whose main function would be educating staff about the perils of corruption, would be set up this month, staffed by workers trained and supervised by the KPK.

KPK Deputy Chairman Haryono Umar said graft in state firms was vastly underreported.

“This unit is meant to reduce that gap by informing people about the penalties in graft cases,” he said.

Jail sentences for corruption range from four years to life in prison, he said.

Haryono also said the program aimed to “create a healthy business situation where graft awareness and good corporate governance are the norm.”

Questions of corruption have surrounded Pertamina since April, when British company Innospec Ltd. plead guilty to bribing Pertamina employees and Indonesian officials in order to keep its fuel additive tetraethyl lead on the market.

According to court documents, between 2002 and 2006, Innospec paid bribes to postpone the enforcement of a 1999 government regulation banning the use of TEL. The law finally took effect in 2006.

As well as setting up antigraft units, the ministry and the KPK are trying to wrap up the State Official’s Wealth Report (LHKPN), which compiles the wealth records of 6,453 senior officials from state-owned firms.

More than 1,000 officials had yet to file, Mustafa said.

He said the ministry and the KPK had issued a reporting deadline of Aug. 17, the nation’s Independence Day.

Officials failing to report by then face sanctions.