The Moment for a Total Transformation of SOEs

KOMPAS/ALIF ICHWAN

Erick Thohir (second right) allow journalists to ask questions during a press conference at the Finance Ministry in Jakarta, Thursday (5/12/2019). The press conference was used to explain the chronology of events in the smuggling of the Harley Davidson motorcycle and Brompton bicycles using Garuda Indonesia\'s new aircraft. The Customs and Excise Directorate General of the Finance Ministry uncovered the smuggling, which had been ordered by president director of PT Garuda Indonesia Tbk, I Gusti Ngurah Askhara. The contraband was smuggled on a new Airbus A330-900 Neo aircraft belonging to Garuda Indonesia.

The dismissal of I Gusti Ngurah Askhara Danadiputra as the president director of Garuda Indonesia airline strengthens the signal that a transformation of state-owned enterprises (SOEs) is currently being conducted by the government.

JAKARTA, KOMPAS — President Joko “Jokowi” Widodo said the firm measure taken by the government in the case of PT Garuda Indonesia (Persero) Tbk would also be applied in other state-owned enterprises that commit fraud.

"I think the message is very clear. No one should repeat the same mistake. That\'s a message for everyone, don\'t play around, " the President said on the sidelines of the inauguration of the Kunciran-Serpong Toll Road on Friday in South Tangerang, Banten.

KOMPAS/ALIF ICHWAN

Officers assemble the parts of a Harley-Davidson motorcycle before a press conference at the Finance Ministry in Jakarta, Thursday (5/12/2019). The press conference was used to explain the chronology of events in the smuggling of the Harley Davidson motorcycle and Brompton bicycles using Garuda Indonesia\'s new aircraft. The Customs and Excise Directorate General of the Finance Ministry uncovered the smuggling, which had been ordered by president director of PT Garuda Indonesia Tbk, I Gusti Ngurah Askhara. The contraband was smuggled on a new Airbus A330-900 Neo aircraft belonging to Garuda Indonesia.

State-Owned Enterprises (SEOs) Minister said that Erick Thohir ensured the SEO Ministry would not only "clean up" Garuda, but also other SOEs. "If they are dirty, of course, we have to sweep them. The President has made an open statement to restructure the management of SOEs if they are not on the right track. He also said it was time to clean up," said Erick.

Dismissed

Askhara Danadiputra, alias Ari Askhara, was removed from his position as the president director of Garuda Indonesia for his alleged involvement in the smuggling of a used Harley-Davidson motorcycle and Brompton folding bicycles, which were transported by Garuda Indonesia Airbus A330-900neo during a flight from France.

Based on reports from Garuda Indonesia’s audit committee and board of commissioners, Ari Askhara had asked Garuda personnel in Amsterdam in 2018 to find a Harley-Davidson for him.

The motorbike was then purchased in April 2019 and its payment was made through a bank transfer made by Garuda Indonesia’s finance manager in Amsterdam.

The Finance Ministry estimated the smuggling of the Harley-Davidson motorcycle and Brompton folding bicycles caused state losses of between Rp 532 million and Rp 1.5 billion. Garuda\'s board of commissioners appointed Garuda\'s director of finance and risk management Fuad Rizal as the acting president director until an extraordinary general shareholders meeting was held to name the airline’s new president director.

KOMPAS/HARYO DAMARDONO

Garuda Indonesia Airlines introduces the Airbus A330-900 neo aircraft on Wednesday (27/11/2019) at the GMF hangar at the Soekarno-Hatta International Airport in Cengkareng, Banten. Soekarno Hatta Airport Customs and Excise officials found 15 boxes of Harley Davidson motorcycle parts and two boxes containing Brompton bicycles.

Transportation Minister Budi Karya Sumadi said the revelations were a good moment to built good corporate governance by appointing directors with competency and a good track record, and who are committed to improving SEOs.The managing director of the Institute of Management in the Department of Economics and Business at University of Indonesia, Toto Pranoto, said the removal of Ari Askhara strengthened the signal that a transformation of SOEs was being carried out by the SOEs minister.

Soon after he was appointed as SOEs minister in October 2019, Erick has indeed carried out a number of breakthroughs in various state owned companies. He appointed a number of figures to strengthen the supervision of SOEs, including former Jakarta Governor Basuki Tjahaja Purnama as Pertamina\'s chief commissioner and former vice-chairman of the Corruption Eradication Commission (KPK) Chandra Hamzah as the chief commissioner of Bank Tabungan Negara (BTN).

Besides being professional, SOE leaders must be able to prove that they have no personal interest in carrying out their duties. They need the trust of their employees and the public to carry out the transformation.

The initial measures taken by Erick are expected to give momentum to the transformation of SOEs a whole. According to Toto, in order to achieve an optimal goal, this transformation required a leader with integrity. "The transformation of SOEs must be manifested in the implementation of good corporate governance [GCG] as a corporate culture. The dismissal of Garuda\'s president director is a signal to people who work at SOEs not to play around in implementing GCG. In addition to firm and consistent law enforcement, the presence of leaders with strong characters is also needed," said Toto.Besides being professional, SOE leaders must be able to prove that they have no personal interest in carrying out their duties. They need the trust of their employees and the public to carry out the transformation.

Beyond internal affairs, the overall SOE ecosystem also requires transformation. In this case, Toto argues, the plan to establish SOE holding companies is still relevant. However, the formation of holding companies requires SEO to be clustered based on roles. SEOs that are oriented toward public service obligations must be separated from profit oriented companies.

Under government control

The Harley-Davidson motorcycle and Brompton bicycles have been confiscated by the Finance Ministry’s Customs and Excise Directorate General. “The case is still under investigation," said the directorate general’s communications and publications head Deni Surjantoro.

KOMPAS/ALIF ICHWAN

Finance Minister Sri Mulyani (second left) and State-Owned Enterprises (SOE) Minister Erick Thohir (second right) allow journalists to ask questions during a press conference at the Finance Ministry in Jakarta, Thursday (5/12/2019). The press conference was used to explain the chronology of events in the smuggling of the Harley Davidson motorcycle and Brompton bicycles using Garuda Indonesia\'s new aircraft. The Customs and Excise Directorate General of the Finance Ministry uncovered the smuggling, which had been ordered by president director of PT Garuda Indonesia Tbk, I Gusti Ngurah Askhara. The contraband was smuggled on a new Airbus A330-900 Neo aircraft belonging to Garuda Indonesia.

State Assets Director General Isa Rachmatawarta, said the Harley-Davidson and Brompton bikes could be auctioned by the state. Meanwhile, the chairman of the Corruption Eradication Commission (KPK) Agus Rahardjo said if there were indications of corruption in the Garuda case, the KPK would investigate.

"The case is currently being investigated by customs and tax officials. If it has anything to do with corruption, surely the KPK will also play a part," Agus said (JUD/SHR/ERK/NAD/NTA)