Subject: TNI Reports 'Unaccountable' for Failing to Report Huge Non-Tax Income

The Jakarta Post

Thursday, October 23, 2008

TNI Reports Deemed 'Unaccountable'

Abdul Khalik, The Jakarta Post, Jakarta

The Supreme Audit Agency (BPK) has exercised a "disclaimer opinion" on financial reports from the Defense Ministry and the Indonesian Military (TNI) over the last two years for failing to include huge amounts of non-tax income.

The reports did not present clear income, estimated at billions of rupiah, generated mostly from productive assets such as rented land and buildings, because the money had not been reported to the Finance Ministry.

The BPK also found the lost state money from the undervaluation of the two institutions' assets that may have been sold illegally or rented out by certain military officers.

BPK chief Anwar Nasution said here Wednesday the TNI and Defense Ministry did not have a standardized accounting system that would have allowed them to detect such incomes and audit all their assets.

"In reports on accounting management, the Defense Ministry is neither transparent nor accountable," he told a gathering with officers from the ministry as well as TNI, Army, Navy and Air Force headquarters.

Defense Minister Juwono Sudarsono and TNI chief Gen. Djoko Santoso attended the meeting to discuss how the ministry and the TNI could fix their accounting and financial management system to avoid another disclaimer opinion in 2008.

Anwar said the unaccountable reports were also caused by the two institutions' outdated computers and financial control system that did not meet the requirements of the Indonesian Accounting Standard (SAI), creating significant discrepancies between the money reported by the Finance Ministry and that by the Defense Ministry.

In addition, records of logistics, assets and military equipment belonging to the ministry and the TNI were not up to standard.

In its July 17 report, the BPK found land owned by the TNI, the Army, the Navy and the Air Force had been misused.

Some 283 plots of land owned by the Army in its nine territorial commands had been converted into plantation and agriculture areas, the BPK said.

It was not clear whether the land was rented out or sold, or where the income was reported to, it added.

In West Java, for instance, 379 official homes at the Siliwangi military command were converted into factory outlets, while Navy land worth around Rp 653 billion in Jakarta was used for private homes, with no financial accountability.

The BPK said land owned by the Air Force in 42 locations, valued at around Rp 2.1 billion, had been rented out, and that the supposed income of Rp 61 billion from the transaction had not been submitted to the state.

Further, the Air Force's land and a building in Pancoran, South Jakarta, were rented out at low prices to PT Aldiron, the BPK said, adding the case had caused Rp 278.49 billion in state losses.

However, Anwar praised the defense minister and the TNI for their efforts and systematic targets with a clear time frame to fix their financial system and reports.

Many other ministries had not even submitted their reports to BPK, he added.

Speaking at the discussion, Juwono vowed to fix the ministry's financial accounting system, saying his office had noted some 4,000 problematic assets.

"We will enhance the accounting capability of officers in Jakarta and elsewhere to meet the requirements. They are the ones who report the expenses in detail," he said.

Djoko also promised to improve the TNI's financial accountability report, underlining a wide range of assets under control of the military.

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