Behind the great wall of confidentiality at the Indonesian Defence Ministry concerning its spending of taxpayer money, a leaked document has provided a snapshot of budgetary irregularity surrounding the purchase of a weapon system for the Army.
The ministry has allegedly overspent some US$134.9 million (S$176.7 million) in the procurement of a multi-launcher rocket system (MLRS) worth $405 million from Brazil's Avibras Industria Aeroespacial, according to an investigation report made by the ministry's inspectorate general, a copy of which was recently obtained by The Jakarta Post.
In its letters to the ministry's top officials, including to then defence minister Purnomo Yusgiantoro and deputy defence minister Sjafrie Sjamsoeddin in April and June 2012, the inspectorate had flagged several violations in the procurement process.
The inspectorate, a division in the ministry tasked with ensuring the compliance of all officials to existing regulations and procedures, argued that the policy to award Avibras had violated a presidential instruction and a regulation issued by the Government Procurement of Goods and Services Agency (LKPP).
Avibras, according to the inspectorate, cannot meet the technical specifications required by the procurement tender, such as the provision of eight fire-control systems. Moreover, the company can only provide seven of the required 38 ammunition supply vehicles and two of the seven mobile workshop vehicles needed to support the MLRS infrastructure.
The MLRS is armored artillery, similar to a truck, but equipped with a self-propelled rocket launcher.
According to the inspectorate, the $134.9 million discrepancy in the specifications unfulfilled by Avibras would have allowed the procurement of an extra battalion of the 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 for the bidding process.
"The violations are very vulnerable [for 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 Sumartono said in the letter. Sumartono, already retired, could not be reached for comment.
Defence Minister Ryamizard Ryacudu said that while he was not aware of the details of the case, he would review all procurements made by his predecessor and added that he would limit the role of brokerage companies that were regularly involved in securing deals at high cost to taxpayers.
"I've instructed my officials to be highly responsible in spending public money and warned them that I will not defend them if they are caught by the KPK [Corruption Eradication Commission]," Ryamizard said recently.
The then Defence Ministry's chief for procurement centre of defence facilities agency (Baranahan), Lt. Gen. Ediwan Prabowo, who is responsible for the MLRS procurement, denied any wrongdoing.
Ediwan, who was promoted in May to become the ministry's secretary-general, argued that the procurement was above-board and that the defence minister had endorsed it despite notes from the inspectorate general.
"You should ask the then inspector general about his complaints. I don't want to speculate why he conducted the review," said Ediwan, who served as the private secretary of then president Susilo Bambang Yudhoyono between 2009 and 2011.
Ediwan said that the issue was made public because the losing company refused to accept the bidding result.
"The issue was blown out of proportion by a company that won't accept defeat. Avibras' MLRS scores higher than those offered by Roketsan. Avibras' is combat-proven, has multi-caliber capacity, has wider destructive scope and can be transported with C-130 Hercules aircraft," he said.
"We've invited many outside parties, including the KPK, to supervise our procurement process and there has been no issue at all," he said, adding that some of the MLRS had already arrived and had been put on display during the Indonesian Military's (TNI) anniversary parade on Oct. 7.
For the past five years, the Defence Ministry has received a bigger budget than any other institution has ever received. Around 95 trillion rupiah ($7.72 billion) have been earmarked for next year, up by 7.2 per cent compared to this year.