(Jakpost) House turns blind eye to dubious US$ 405 million deal

12/12/2018

Lawmakers involved in approving the budget for the Defense Ministry’s problematic purchase of an Army artillery system have acknowledged foul play in the procurement, but have decided to rule out the findings.

The House of Representatives’ Commission I overseeing defense has received a report from the Defense Ministry’s inspectorate general alleging that the ministry overspent some US$134.9 million in the purchase of a multi-launcher rocket system (MLRS) worth $405 million from Brazil’s Avibras Industria Aeroespacial in mid 2012.

House Commission I member Maj. Gen. (ret) TB Hasanuddin, who also served in the commission between 2009 and 2014, said the House had approved the procurement budget and it was discussed thoroughly with other commission members.

“I’ve heard there is an irregularity in the price as revealed by the inspectorate general. That should be settled by the ministry,” said Hasa-nuddin of the Indonesian Democratic Party of Struggle (PDI-P).

“The House was not involved in arranging the details of the procurement. We only agreed on the maximum budget for the purchase, leaving the rest to the ministry,” said Hasanuddin, who was then head of the commission’s subcommittee for defense procurement.

In its letters to the ministry’s top officials, including to then defense minister Purnomo Yusgiantoro and deputy defense minister Sjafrie Sjamsoeddin in April and June 2012, the inspectorate flagged several violations in the procurement process.

The inspectorate, a division in the ministry tasked with ensuring the compliance of all officials with existing regulations and procedures, argued that the decision to select Avibras had violated a presidential instruction and a regulation issued by the National Procurement Agency (LKPP).

Avibras, according to the inspectorate, could not meet the technical specifications required by the procurement tender, such as the provision of eight fire-control systems.

Moreover, the company could only provide seven of the required 38 ammunition supply vehicles and two of the seven mobile workshop vehicles required to support MLRS.

The inspectorate also accused the Army of negotiating with Avibras, which had partnered locally with PT Poris Duta Sarana to secure the deal, to water down the required specifications after Avibras outbid Turkey’s Roketsan Missiles Industries, which had teamed up with PT Alabasta Inti Indonesia in the bidding process.

“The violations are very vulnerable [to prosecution] if viewed from the auditor’s side, particularly when the audit is conducted by the BPK [Supreme Audit Agency],” then inspector general Vice Admiral Su-martono said in the letter.

The ministry’s then Defense Facilities Agency (Baranahan) procurement center chief, Lt. Gen. Ediwan Prabowo, who was responsible for the MLRS procurement, has denied any wrongdoing.

Ediwan said the issue was made public because the losing firm refused to accept the bidding result.

“The issue was blown out of proportion by a company that won’t accept defeat. Avibras’ MLRS scores were higher than those offered by Roketsan. Avibras’ is combat-proven, has multi-caliber capacity, has a wider destructive scope and can be transported with C-130 Hercules aircraft.”

Former Commission I chairman Mahfudz Siddiq, who is still serving in Commission I but is no longer chairman, said the inspectorate’s investigation into the MLRS was discussed in the commission and that there had been a settlement.

“We’ve told the ministry that it should award a different project to Turkey,” said the Muslim-based Prosperous Justice Party (PKS) politician.

“But during a reassessment at the ministry, it was decided that the MLRS for the Army would be given to Brazil while the Navy would get a similar one from Turkey. We assumed at the time that the procurement would no longer be an issue,” he said.

The lawmakers’ responses to the MLRS issue were less critical compared to their reaction to the ministry’s purchase last year of 180 refurbished Leopard and Marder tanks from Germany worth $280 million.

Several lawmakers at the time even threatened to launch a special inquiry into the tank purchases.

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(Jakpost) House turns blind eye to dubious US$ 405 million deal