T

he Corruption Eradication Commission (KPK) will expand its investigation into alleged graft at port operator PT Pelindo II after an audit found indications of massive state losses in a deal between the state-owned company and Hutchison Port Holding (HPH), a unit of the world’s largest port operator CK Hutchison Holdings Limited.

A recent estimate by the Supreme Audit Agency, which put potential state losses from the deal at Rp 4.08 trillion (US$306 million), will reportedly help KPK investigators work in a fast and focused manner to uncover the case.

“The estimation of state losses will help accelerate the investigation process,” KPK deputy chairman La Ode Syarif said on Thursday.

According to the BPK, some irregularities were found in the contract extension given by Pelindo to Hong Kong-based HPH to operate and manage the Jakarta International Container Terminal (JICT) in 2014. The contract was awarded by Pelindo, acting as a representative of the government.

“BPK concluded that there were indications of irregularities in the process of extending the operating contract of JICT,” BPK chairman Moermahadi Soerjadjanegara said.

Moermahadi did not elaborate on the alleged irregularities, but lawmaker Diah Rieke Pitaloka, who leads a House of Representatives team tasked with investigating the same case, said on Wednesday that HPH’s right to operate JICT was due to end in 2019, but Pelindo executives rushed to extend the contract without receiving approval from the Transportation Ministry.

Diah said the decision to extend the contract was not found in any previously signed agreement or plan made by the two companies, and it had not been made through a shareholder meeting.

“It was a sudden decision,” Rieke said. “If the contract is not extended after 2019, 100 percent of the profit from operating JICT will go to Indonesia,” she said.

The signing of the extension contract in 2014 incited backlash from the JICT employees, who staged a rally to demand the annulment of the contract, which they perceived as a cause of state losses and violation of the law because it was made before the contract was due to end.

A previous team formed in 2015 to look into the controversy surrounding the signing of the contract had defended Pelindo, saying the down payment paid by HPH to PT Pelindo was highly beneficial for the public.

It was reported by the team that, under the contract extension agreement, Pelindo increased its stake in JICT to 51 percent from the previous 49 percent with HPH being obliged to pay $250 million as a down payment to Pelindo.

Pelindo, which then was looking to speed up the construction of Kalibaru Port in North Jakarta, had also raised HPH’s rent from $60 million to $120 million a year.

Pelindo corporate secretary Shanti Puruhita said the company could not make any statement until it received the audit report from the BPK.

“We are waiting for the report so we can study and evaluate it before providing clarification,” she said, adding that the case had happened years ago, therefore the current management needed to be careful in making any statement.

The KPK also named in 2015 then Pelindo president director RJ Lino a suspect in a corruption case surrounding the procurement of three quay container cranes in 2010. The National Police also launched an investigation into Lino and Pelindo over a purchase of 10 mobile cranes.

The HPH case is widely thought of as a test to determine whether Indonesia will honor contract sanctity with foreign investors. Since taking over JICT in 1999, HPH has been plagued by a string of troubles from Indonesian officials and politicians, who have regularly questioned the legality of the company’s purchase of JICT from Pelindo. (ecn/kuk)