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fter postponing the hearing for one week, the South Jakarta District Court opened on Monday the pretrial hearing of former head of the Supreme Court Audit Agency (BPK), Hadi Poernomo, who is challenging the Corruption Eradication Commission'€™s (KPK) decision to name him a suspect in a tax case involving Bank Central Asia (BCA).

The case revolves around Hadi'€™s decision during his tenure as the Finance Ministry'€™s director general of taxation between 2002 and 2004 to approve a request by BCA for a tax waiver, which the KPK said had caused Rp 375 billion (US$29 million) in state losses

Hadi, who decided not to be represented by any lawyers in Monday'€™s hearing, presided over by judge Haswandi, claimed that the KPK had no authority to investigate his approval of BCA'€™s request because any decision made by the tax directorate was subject to the taxation court under the supervision of the Finance Ministry.

'€œThe only way the KPK could jump into tax matters is if it finds a policy made by the directorate was plagued by criminal activities such as kickbacks or bribes,'€ Hadi said, reading his pretrial motion in court.

Hadi added that any wrongdoings with regard to tax policies were not subject to criminal offenses as they were related to administrative affairs because any decision made by the directorate could be challenged through an appellative mechanism at the tax court.

Hadi further said the KPK was wrong when claiming that its investigation had found that his decision had caused the state losses because such a conclusion could not be made until the tax court concluded that the respective decision was marred with irregularities.

The former tax boss will appear at the court to present evidence and witnesses to back up his pretrial hearing on Tuesday, while the KPK is slated to present its counter arguments on Wednesday.

Hadi earlier withdrew the petition on April 13 after the South Jakarta court consecutively crushed three pretrial pleas, arguing that the Criminal Law Procedures Code (KUHAP) did not permit legal charges from law enforcement institutions to be challenged in a pretrial.

The Constitutional Court, however, offered a different interpretation when weeks later it passed a judicial review petitioned by former oil and gas executive and graft convict Bachtiar Abdul Fatah.

After Monday'€™s hearing, KPK'€™s legal division member Yudi Kristiana, who is also an experienced prosecutor, dismissed Hadi'€™s arguments saying that the KPK had the authority to investigate alleged abuse of power in tax decisions.

Yudi said it was true that all administrative wrongdoings in tax policies were subject to the General Taxation System (KUP) Law as claimed by Hadi, but any form of abuse of power in making the respective tax policy would be subject to the Corruption Law No. 20/2010.

'€œWhen it comes to causing state losses by abusing power, any tax decision will be subject to the corruption law not the KUP. The KPK wants to innovate by revealing corruption that was hiding behind a tax decision,'€ Yudi said.

Yudi said Hadi'€™s justification, if accepted by the judge, could be used by all officials at the tax directorate to justify their abuse of power in the name of policy making.

'€œWe have all the evidence,'€ Yudi said.

The case began when BCA fielded a request with the income tax directorate on July 12, 2003, for income tax leniency as a result of bad loan restructuring worth Rp 5.7 trillion in 1999.

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