MM 5001

Business Ethic, Law and Sustainibility

Case Study

HAMBALANG CORRUPTION CASES

MBA YPA 50

Saqina Q. Purnama (29113393)

MASTER OF BUSINESS ADMINISTRATION SCHOOL OF BUSINESS AND MANAGEMENT INSTITUT TEKNOLOGI BANDUNG 2014

HAMBALANG CORRUPTION CASES

1.

Hambalang case is a corruption case of Hambalang sports facility construction

projects fund that involve numbers of Partai Demokrat (Democratic Party) official, which is the ruling party and also hold seat in ministry. Sports facility for athlete planned to be built on a land area of 312 thousand hectares in the village of Hambalang, Bogor regency and projected budget consuming Rp 2,58 trillion, which is violated Regulation of the Minister of Finance No. 56/2010 and the Regulation of the Minister of Public Works No..45/2007. Two ministers have not signed, but the funds are liquid. If the view of the BPK audit dated October 30, 2012 (Rizal open the audit documents), he was associated with the melting process advances Hambalang Project. CPC stated, "Due to multi-year contract approval process violated provisions, then the parent contract should not happen, ... [then the remaining unspent advance money] in the amount of Rp116, 9 billion, an indication of state losses. In its Hambalang audit, the BPK also found that Rp 7.3 billion in funds from Adhi Karya went to several legislators in 2010 and 2011, when discussion of the sports center's construction Began. On Thursday (Sep 5 2012), the Supreme Audit Board (BPK) audit report of Hambalang Submitted case to the Commission. The audit mentions that the total state losses in the case reached Rp 463.66 billion.T his case covers the allegation of bribery to a number of party, such as government officials and members of parliament, from the arrangement of tender and the project winner to the inflation of the project budget. a) Until now KPK has set a number of suspects 1. Ministry of Youth and Sports In 2010-2011 disburse cash payments to the Joint Operation (JO) PT Adhi Karya-PT Wijaya Karya worth Rp 471 billion. 2. Operation Cooperation (KSO) Adhi-Wika Before KSO formed, from 2009 to 2010 Wika and Adhi has poured costs Rp 19.32 billio to many people. After KSO formed, the cost poured again iRp 15.22 billion. So the total funds which are flowing to certain parties at least Rp 34.54 billion

A. Subcontractor! 1. PT Global Daya Manunggal Got a job contract for junior dormitory structure and architecture, also for multipurpose building, worth Rp 142.4 billion. The company has received payment of Rp 60.2 billion. The funds from Global Daya reach to: - Former Sports Minister Andi Mallarangeng Alifian (Rp 4 billion and U.S. $ 550 thousand). - Andi Zulkarnain Mallarangeng (Rp 4 billion). - Former Head of Planning Ministry, Deddy Kusdinar (Rp 250 million). !2. PT Dutasari Citralaras Got a job contract for mechanical and electrical connection of PLN worth Rp 328 billion. The company has received payment of Rp 170.3 billion. There was didnot mentioned cash reached the company of Anas Urbaningrum wife-Athiyyah Laila. B. Direct Sent 1. Company - PT Dutasari commitment fee (Rp 28 billion). - Damages to the Permai Group, owned by M. Nazaruddin (Rp 10 billion). 2. Personal - Former Democratic Party Chairman Anas Urbaningrum (Rp 2.2 billion). - Director of Dutasari Mahfud Suroso (Rp 28.8 billion). - Former Chairman of Sports DPR Commission Mahyudin (Rp 500 million). - Members of Badan Anggaran DPR Olly Dondokambey (Rp 2.5 billion). - Former Head of National Land Agency Joyo Winoto (Rp 3 billion). - Former Secretary of the Ministry of Sports Wafid Muharam (Rp6.5 billion). - Deddy Kusdinar (Rp 1 billion). - Former Director of Operations of Adhi Karya, Teuku Bagus Mokhamad Noor (Rp 4.5 billion). - Some officials in the Ministry of Public Works (Rp 135 million).

b) Criminal charges Sentence charged due to violation of corruption law (Law No. 31 of 1999 on the Eradication of Corruption, Law No. 20 of 2001 on the Eradication of Corruption, Law No. 30 of 2002 on the Commission for the Eradication of Criminal Offences of Corruption and UU30-2002 Corruption Eradication Commission), example of sentence charged : Former Youth and Sports Minister Andi Mallarangeng Alifian, and his brother. Corruption Eradication Commission Chairman Abraham Samad said that Mr Mallarangeng Andi was accused of abusing his authority to enrich himself and other parties or persons, a violation of articles 2 and 3 of the 1999 Corruption Law and will be charged with abusing power to enrich himself or others - this carries a jail sentence of up to 20 years. M. Nazaruddin was sentenced to seven years and 10 months in prison. He was also asked to pay a fine od US$22,000; 13,657 or serve another four months in prison. Former Democratic Party Chairman Anas Urbaningrum, Anas was charged with accepting a bribe under Article 12 of Indonesias 1999 Anti-Corruption Law, which carries a maximum sentence of 20 years in prison if convicted. He will be housed in the KPKs detention center for an initial period of 20 days as the investigation continues Deddy Kusdinar (Rp 1 billion). Deddy had violated Article 3 of Law No. 31/1999 on corruption. Prosecutors demanded that Deddy pay a fine of Rp 300 million (US$ 25,320) or serve an additional year in prison if he failed to pay.! Prosecutors demand of nine years in prison Mahfud Suroso) as the director of PT Dutasari allegedly violated article 2, paragraph 1 or Article 3 of Law No. 31 of 1999 as amended by Act No. 20 of 2001. MS is also alleged to article 55 paragraph 1 to 1 of the Criminal Code. Former Operational Director and Head of Construction 1 Division of PT. Adhi Karta, Teuku Bagus Mokhamad Noor was also named as suspect after violating Article 2 Paragraph 1 and or Article 3 of the Law number 31 of 1999 on the Eradication of Corruption Acts in reference to Article 44 Paragraph 1 of the Criminal Code.

2.

Yes, it does. For instance, gratification did by Anas, he was alleged to accept

gratification from the Hambalang. The whistle blower for Anas is his own former ally in the party, Nazzaruddin. Nazzaruddin said that he bought Anas a luxury car Toyota Harrier from the Dutasari Pecenongan Showroom in cash, and the money came from the Hambalang project. Another allegation that involves Anas Urbaningrum, he is suspected to play an important role in smoothing out the land permit processing for the Hambalang project. KPK, according to Samad, has received information and obtained initial findings which shed light upon the investigation into the gratification scandal. "This includes money trail leading to the congress and the funds disbursal from state-owned enterprises 3. The case also involved abuse of authority. In Hambalang, example of the

problem is Andi Mallarangeng, he is abusing his own authority while being a Youth and Sports Minister. Andi have misused his authority, resulting in state losses of Rp 463.6 billion (US$40.8 million) to enrich himself and other parties or persons, a violation of articles 2 and 3 of the 1999 Corruption Law. Andi was having manipulated in the projects' tender, swelling the project's budget and involving in sub-contract arrangement fraud during his ministerial service. Reports said that those misconducts cost the state more than 750 billion rupiah (about 68.5 million U.S. dollars). The 32 hectare-wide project is now deserted as the location site was apparently not suitable for such a project with some of already- constructed buildings in near-collapse condition. 4. From KPK report, it stated that the 15 legislators in Commission X had

violated the proper mechanism of budget deliberation in the House, where nine of them agreed to increase the 2010 budget allocation to the Youth and Sports Ministry by Rp 600 billion even though it had not been deliberated with the rest of the commissions members. The BPK also found some members of the commission that agreed to increase the ministrys budget by Rp 920 billion in 2011 without a proper discussion between the Houses Commission X and the ministry. Head of BPK, Hadi Purnomo stated, the calculation showed that Indonesia had suffered a state loss of Rp 463.67 billion. Hadi elaborated that the total budget channeled by the state for the project in 2010 and 2011 was Rp 471.71 billion.

However, Rp 8.03 billion was then subtracted from the total budget. The figures become Rp 463.67 billion. Based on the examinations, BPK concluded that the state loss hitting Rp 463.67 billion is as a result of misappropriation committed by people involved in Hambalang P3SON construction. The misappropriation covers land certificate process, building permit process, auction process, RKA-KL (Working Plan BudgetMinistry and Institution) and contract approvals process, construction execution, payment, and budget mark-up. 5. Yes, there are conflict of interest between the parties which involved. They

need to fulfill their own desire to enrich themselves and other parties/persons. On the other hand they need to support their own party (most of suspect is from Democratic Party) for election and funding campaign activities of their own party. In every election, many candidates require a coalition of parties because no one single party can meet the electoral threshold. This means that all the parties have to be paid. Those appointed in certain posts of government, including state-owned enterprises, are obliged to raise funds for the parties. It is no surprise, therefore, to see so many ministers in our cabinet facilitating business licenses or permits for party-related cronies. Governors and district heads inevitably have to do the same. That is why political corruption has become systemic, endemic and widespread. According to Marcus Mietzner in his 2007 article Party Financing in PostSoeharto Indonesia: Between State Subsidies and Political Corruption, former National Police deputy chief Adang Daradjatun was widely believed to have pledged between Rp 14 billion (US$1.17 million) and Rp 150 billion to the PKS as a nomination fee to contest the Jakarta gubernatorial election in 2007. Whether this is true or not, nobody knows, and the party has never denied it.

Reference : Amelia,R. 2014. Anas Detained by KPK Over Hambalang Corruption Case. Available at www.thejakartaglobe.com (diakses pada tanggal 5 Maret 2014) Anonim. 2012. Indonesian Minister Andi Mallarangeng Resigns Over Graft Charges. Available at www.bbc.com (diakses pada tanggal 5 Maret 2014)

Indriyani, Dayu. 2013. Hambalang, BPK Revises States Loss. Available at www.terapos.com (diakses pada tanggal 5 Maret 2014) Jong, N.H. 2013. Money Binge in Hambalang Graft Case. Available at www.thejakartapost.com (diakses pada tanggal 5 Maret 2014) Lubis, M.T. 2013. Political Parties or Entreprise?. Available at www.ayovote.com (diakses pada tanggal 5 Maret 2014) Putro, Wahyu. 2013. Ini Daftar Para Penerima Dana Haram Hambalang. Available at www.tempo.com (diakses pada tanggal 5 Maret 2014)