Bribery scandal rocks ailing Indonesian steelmaker Krakatau Steel

JAKARTA (The Jakarta Post/ANN) - Indonesia's anti-graft body arrested state-owned steel manufacturer PT Krakatau Steel director for allegedly receiving bribes.

The Corruption Eradication Commission (KPK) has named Wisnu Kuncoro, a director at state-owned steel manufacturer PT Krakatau Steel, and three business executives suspects in a case of alleged bribery related to procurement projects within the country’s largest steel producer.

Wisnu, the company's production and technology director, allegedly received kickbacks to grant the projects to machinery supplier PT Tjokro Bersaudara (Tjokro Group) and engineering and manufacturing company PT Grand Tech after executives of the companies agreed to pay “commitment fees” to him.

Alexander Muskitta, the company’s maintenance and facilities general manager, allegedly received Wednesday a check amounting to Rp 50 million from Grand Tech president director Kenneth Sutardja, while Tjokro Group chief operating officer Kurniawan Eddy Tjokro allegedly handed US$4,000 and Rp 45 million to Alexander at a coffee shop in South Jakarta.

Alexander, suspected to have acted under Wisnu’s orders, is said to have later put the money in his own bank account.

The antigraft body arrested Wisnu on Friday along with Alexander at a shopping mall in Bintaro, South Tangerang, while the latter was delivering Rp 20 million in cash as part of the alleged kickbacks. It also detained Kenneth on the same day at his house in Kelapa Gading, North Jakarta, while Kurniawan still remains at large.

KPK deputy chairman Saut Situmorang said all four suspects violated the Corruption Law.

“We suggest that KET immediately come to the KPK building to surrender,” Saut said, referring to Kurniawan, during a press conference at the KPK headquarters in South Jakarta on Saturday evening.

The KPK also arrested on Friday another Krakatau Steel official, Hernanto, along with his driver and Heri Susanto in Kuningan, South Jakarta, and Cilegon, Banten, respectively. Neither had been named suspects.

Saut explained that Wisnu had made a procurement order related to boilers and containers for the company this year. The projects are worth Rp 24 billion and Rp 2.4 billion respectively.

Alexander allegedly introduced Kenneth and Kurniawan, who were interested in taking the projects, and ready to give a commitment fee of 10 percent of the total value of the procurement fee stated in the contract.

“[Alexander] had allegedly been acting as a representative of [Wisnu],” Saut said.

Saut said Alexander had asked Kenneth and Kurniawan to give him Rp 50 million and Rp 100 million respectively.

The KPK investigators seized Alexander’s bank passbook as evidence, as all of the kickback money was allegedly only put in his bank account.

Saut said the KPK regretted that there were still cases of bribery at state-owned companies.

"Krakatau Steel, established in 1970, has become a leading steel producer. However, the ‘dirty’ practices inside have made it so that the steel manufacturer is not performing well,” he said.

The KPK deputy head urged all state-owned companies to conduct transparent procurement processes.

"They must close the door to brokers or agents so that the industry will be competitive," Saut added.

The steel company, which operates in Cilegon, Banten, has suffered losses for the past six years. As of the third quarter of 2018, the publicly listed company recorded a loss of US$37.38 million, down 50.19 percent from the same period in the previous year.

It vowed earlier this year to restructure its business and debts in order to regain profits.

Krakatau Steel president director Selmy Karim said the company was currently evaluating its internal management.

The company, Selmy added, was also improving its performance by putting professionalism and good corporate governance forward in a bid to prevent conflicts of interest from arising.

“We will be cooperative with the KPK to resolve the case as soon as possible,” Selmy said in a statement received by The Jakarta Post.


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