House, KPK, BPK to join forces on oil graft probe

Abdul Khalik ,  The Jakarta Post ,  Jakarta   |  Mon, 07/21/2008 10:34 AM  |  Headlines

Three of the country's most powerful bodies have pledged to work together to investigate the alleged misappropriation of billions of dollars in state revenue from the oil and gas sector.

Government officials, lawmakers and businesspeople are reportedly implicated in the suspected embezzlement.

A member of the House of Representatives' special inquiry committee (Pansus) on fuel prices, Drajat Wibowo, said the House committee would work with the Corruption Eradication Commission (KPK) and the Supreme Audit Body (BPK) to uncover corruption in the production, import, export and distribution of Indonesia's oil and gas.

"Pansus will cooperate with the KPK and the BPK to get valid data to determine the magnitude and sources of the alleged misappropriation in the oil and gas sector," he said Sunday.

The committee's first priority will be to summon in the next two weeks Energy and Mineral Resources Minister Purnomo Yusgiantoro, as well as executives from upstream oil and gas regulator BP Migas and state oil firm Pertamina, he said.

The committee was formed to investigate whether it was appropriate for the government to raise fuel prices, given strong public allegations that billions of dollars in revenue from oil and gas were being lost because of inefficiency and corruption.

KPK deputy chairman for prevention Haryono Umar said that after summoning executives from BP Migas and Pertamina, his office had intensified its analysis of all documents relating to the alleged embezzlement, which had reportedly cost the state Rp 200 trillion (US$22 billion).

"We and Pak Anwar (Nasution, BPK chief) have been in close contact over the past week to strengthen our evidence in the case. He (Anwar) can't wait to uncover misappropriation in the sector," Haryono said.

"We are also ready to help the House inquiry committee."

The corruption body last week summoned senior executives from BP Migas to clarify information in the embezzlement cases reported by both the BPK and Indonesia Corruption Watch (ICW).

A BPK audit of government income statements for the 2005-2007 period revealed about Rp 120 trillion in oil revenues went unreported and was spent outside the state budget mechanism.

The BPK also found in its audit for the 2006-2007 period that BP Migas overpaid about Rp 40 trillion in recovery costs to the company's partners.

ICW in its report to the KPK estimated the misappropriation at BP Migas from 2000 to 2007 to be worth more than Rp 194 trillion.

Drajat, who is an economist, calculated that misappropriation in oil imports had cost the state at least US$2.1 billion each year, and a colleague of his found the state had lost $2 billion a year from the overstatement of recovery costs.

"The funny thing is that right after Pansus was formed, BP Migas and Pertamina announced that the country's annual oil output had risen from 920,000 barrels to 1 million barrels," he said.

"So the modus operandi for the embezzlement is to overstate recovery costs while understating output level."

Harry Azhar Azis of the Golkar Party urged the members of Pansus to question members of House Commission VII on energy to explain their decisions relating to the oil and gas sector, saying he had heard reports some lawmakers were involved in the "oil mafia" that had stolen billions of dollars from the state's coffers.

"It is worth questioning, for instance, why Commission VII raised the 2009 oil consumption target proposed by the government from 32 million barrels to 38.8 million barrels at a time when we are trying to cut oil use," Harry said.

"Also, why did BP Migas propose the 2008 consumption target be increased from 37 million barrels to 42 million barrels?"

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