T

he Corruption Eradication Commission (KPK) claimed on Wednesday that investigation into a high profile tax scandal involving Bank Central Asia (BCA) was on its way with charges awaiting former Supreme Audit Agency (BPK) chairman Hadi Poernomo, the first suspect in the scandal.

The antigraft body made the statement to rebuff speculation that it had put the case in limbo because, as of today, it had yet to question Hadi, who served as the Finance Ministry'€™s director general of taxation between 2002 and 2006, since he was named a suspect back in April.

Hadi is among the favored bureaucrats of former president Megawati Soekarnoputri, the ruling Indonesia Democratic Party of Struggle (PDI-P) chairwoman.

'€œTrust me, the KPK never freezes a graft case. Once someone is named a suspect, he will soon be jailed. We have not questioned or detained him yet because the completion of his dossier is far from complete. This is a banking case and it usually takes a while to finish such cases because it requires a through and careful examination,'€ KPK chairman Abraham Samad said Wednesday.

The case began when the nation'€™s third-largest lender, BCA, submitted a request with the taxation directorate on July 12, 2003, for a tax waiver due to bad loan restructuring worth Rp 5.7 trillion (US$471 million)
in 1999.

After evaluating the request for one year, the directorate announced on March 13, 2004, that it had turned down the request. However, one day before the deadline for BCA to pay the taxes, Hadi, in his capacity as director general of taxation, annulled the decision and granted the request.

Abraham said that the antigraft body would probe other suspects after completing Hadi'€™s dossier.

'€œIf we detain Hadi now, it means that we are limited by 120 days to complete his dossier before handing his case to the court,'€ Abraham said.

In addition to the scandal, the KPK has estimated state losses of Rp 375 billion as a result of Hadi'€™s decision to approve BCA'€™s request.

An investigation carried out by the Finance Ministry, however, found that Hadi'€™s decision had caused potential tax losses of Rp 3.45 trillion.

According to a document of the Finance Ministry'€™s directorate general of taxation dated May 2007, copies of which were obtained by The Jakarta Post, then reform-minded finance minister Sri Mulyani Indrawati requested a full investigation following irregularities in the granting of an income tax waiver to BCA by Hadi.

According to the documents, issued by the compliance and human resources transformation directorate, Hadi'€™s decision went against existing tax regulations and caused huge losses in potential tax revenues from BCA between the 2000 and 2003 fiscal years.

Sri, now World Bank managing director, removed Hadi as director general of taxation in 2006, several years before his retirement. Hadi'€™s ouster marked the start of sweeping reforms in the tax system.

While serving as the tax boss, Hadi was dubbed by many as '€œthe almighty'€ due to his overwhelming authority over tax regulations and supervision.

He was seen regularly accompanying Megawati and her late husband, Taufik Kiemas.

In addition to the case, the antigraft body questioned former Bank Indonesia (BI) governor Darmin Nasution, who was Hadi'€™s successor as the ministry'€™s director general of taxation for the 2006-2009 period.

After questioning, Darmin maintained his innocence in the case saying that he had no knowledge of Hadi'€™s alleged misconduct when approving BCA'€™s request.