Suharto family profited on defense purchase markups, Post says

0 Comments | Asian Political News, July 22, 2002

JAKARTA, July 15 Kyodo

Family members of former Indonesian President Suharto allegedly profited by nearly $1 billion from markups on defense equipment purchases in the 1990s, the Jakarta Post said Monday.

The Post reported that between 1993 and 1995, Suharto's eldest daughter Siti Hardijanti ''Tutut'' Indra Rukmana, under her company PT Bheering Diant Pramata, acted as an agent to procure 20 British-built Hawk-100s for training, 16 Hawk-200 jet fighters and four other Air Force jets worth $1.23 billion.

The original price for the jets was said to be $8 million each, but they were allegedly marked up to $30 million each, giving her a profit of at least $880 million for the transactions.

Her other brokering company, PT Surya Kepanjen, procured 50 Army Scorpion tanks with a price tag of $2.5 million each. Singapore bought the same type of tank at the same time for $1 million each.

Tutut allegedly received another huge profit of $75 million.

In 1996, Suharto's youngest daughter Siti Hutami ''Mamiek'' Endang Adiningsih, through her company PT Dwipangga Sakti Prima, was appointed to procure a simulator for a Hercules transport with a price of $30 million, allegedly considerably more than the usual selling prices of not more than $25 million.

The procurement contracts, the weekly news magazine Tempo said two weeks ago, were usually gained at international air shows such as the Le Bourget Air Show in France, the Farnborough Air Show in Britain and the Down Under Air Show in Australia.

The issue of markups in defense procurement surfaced after President Megawati Sukarnoputri, during a visit to the Czech Republic last month, said the practice was rampant in the past.

Director General for Defense Strategy Maj. Gen. Sudradjat said the government must change its procurement policy to prevent the similar markups.

But Maj. Gen. Aqlani Masa, director general for Defense Equipment Procurement, rejected the idea, saying contractors are needed because ''we don't have enough money to pay in cash.''

He did suggest, however, the government find out the exact prices of the equipment from the manufacturers to prevent similar price gouging in future.

''I admit that in the past, the military's procurement partners were mostly relatives of the Cendana clique,'' Aqlani said, referring to the name of the street where Suharto's family lives.

He said, however, ''not a single cent'' of the misused money went to any military institution.

Suharto's family was allegedly involved in massive corruption, collusion and nepotism during his 32-year rule.

Suharto, the country's former strongman, has been charged with swindling US$571 million of state funds himself.

The case, however, was dropped in September 2000 because he failed to appear in court, allegedly due to ill-health after his doctors declared him mentally and physically unfit for trial.

Suharto, now 81, has suffered a number of strokes since resigning in May 1998.