T

he Corruption Eradication Commission (KPK) questioned state-owned Pelindo II president director Richard Joost Lino on Tuesday as circulating documents revealed irregularities to the value of more than US$20 million in the purchase of equipment by the country'€™s biggest seaport operator.

Audit documents dated 2011 from the Development Finance Comptroller (BPKP), copies of which were obtained by The Jakarta Post recently, indicated foul play in the purchase of three container cranes (QCC) in 2010 for three ports in Palembang, South Sumatra; Pontianak, West Kalimantan; and Lampung.

The documents suggested several violations, including in the direct appointment of Chinese company Wuxi Huadong Heavy Machinery (HDHM) to supply the cranes at a cost of $17 million.

'€œThe procurement process from direct selection [in February 2010] to the direct appointment [negotiations were completed in April 2010] of HDHM did not go through the proper mechanism,'€ the BPKP said in the document.

Pelindo II labor union head Kirnoto confirmed the incident and hoped the KPK could expand its investigation into other violations, including in the procurement of 10 mobile cranes worth Rp 45 billion ($3.9 million) for nine of Pelindo'€™s ports in 2012.

'€œThere'€™s so many financial violations stemming from Lino'€™s policies,'€ Kirnoto alleged.

The mobile crane purchase, according to a document from an independent auditor, was given to China'€™s Guangxi Narishi Century Equipment Co. Ltd., which was a new company.

'€œThe company was established less than two years ago when it participated in the bidding in November 2011,'€ a statement in the audit report said.

Narishi also failed to comply with a requirement to submit its financial reports of the past three years.

Another finding also revealed that Pelindo'€™s procurement with the company accounted for 72 percent of the company'€™s total assets.

KPK spokesman Johan Budi said the antigraft body was investigating alleged irregularities in Pelindo'€™s project bidding and refused to comment further. '€œThe focus of the investigation is on the provision of infrastructure for several ports in 2010,'€ said Johan, adding that no suspects had been named.

In a separate interview before the KPK questioning, Lino said his decision to directly appoint HDHM was legally justified according to Pelindo'€™s internal regulations.

'€œThis is because organizing new bidding for the project, which has been in limbo since 2007, would'€™ve taken time and worsened congestion at the three ports,'€ Lino said.

'€œThe reason we chose HDHM was that it offered the cheapest price.'€

He emphasized he had not broken any internal regulations by directly inviting foreign firms in the bidding, saying the change in the regulation was a normal practice in businesses.

He also argued the change had nothing to do with allegations that it was aimed at accommodating HDHM in the bidding.

In response to the BPKP'€™s audit, Lino said: '€œ[The Pelindo II] board of commissioners commissioned the audit, so you can ask them about it.'€

He said his experience working for a company in China helped him to establish that the companies
he had invited to join the bidding process were the best suppliers for Pelindo.

In regards to the procurement of 10 mobile cranes, Lino acknowledged there were some problems in the delivery process.

'€œWe'€™re now working to fix the problem. After an operational analysis, we conclude that Tanjung Priok Port needs them more than the nine ports as initially planned,'€ Lino said.

He also denied allegations that some of his confidants worked for Narishi.