B’day bash turns ugly for Hadi

JAKARTA. Less than six hours after celebrating his 67th birthday and the revelation of foul play in the additional bailout of Bank Mutiara, previously Bank Century, outgoing Supreme Audit Agency (BPK) chairman Hadi Poernomo was named a suspect by the Corruption Eradication Commission (KPK) on Monday for his alleged role in a tax crime.

The alleged crime revolves around Hadi’s decision during his tenure as the Finance Ministry’s director general of taxation between 2002 and 2004 to discriminatively approve a request by Bank Central Asia (BCA), now the nation’s third-biggest lender, for income tax leniency.

KPK deputy chairman Bambang Widjojanto said that the agency was investigating the possibility that Hadi might have accepted kickbacks in exchange for his decision to approve BCA’s request.

“His decision caused state losses and it benefited other parties,” Bambang said.

The KPK has estimated state losses of Rp 375 billion (US$31.2 million) as a result of Hadi’s decision.

“We have found sufficient evidence to name HP [Hadi Purnomo] a suspect in the case. He has been accused of violating Articles 2 or 3 of the Corruption Law,” KPK chairman Abraham Samad told a press briefing at KPK headquarters.

If found guilty, Hadi could face a maximum sentence 20 years behind bars.

Abraham denied any link between the announcement of Hadi’s status with his last day serving as BPK chairman.

The case began when BCA fielded a request with the income tax directorate on July 12, 2003 for income tax leniency as a result of bad loan restructuring worth Rp 5.7 trillion in 1999.

After evaluating the request for one year, the directorate announced on March 13, 2004 that it had turned down the request.

“But one day before the deadline for BCA to pay the taxes, HP, in his capacity as director general of taxation annulled the decision and granted BCA the request,” Abraham said.

“This was the central role of HP in the alleged crime,” he went on.

Abraham said that other banks had also fielded similar requests at the time, but they had all been rejected by Hadi.

“Of all the banks that applied, only BCA was granted the privilege,” Abraham said.

While serving as the tax boss, Hadi was dubbed by many as “the almighty” due to his overwhelming authority over tax regulations and supervisions.

He was also among then president Megawati Soekarnoputri’s favorite bureaucrats, seen regularly accompanying her and late husband Taufik Kiemas.

Then reform-minded finance minister Sri Mulyani Indrawati dismissed Hadi as director general of taxation in 2006, several years before his retirement. Hadi’s ouster marked the start of sweeping reform in the tax system.

Prior to the KPK’s announcement, Hadi invited journalists to the BPK headquarters in Central Jakarta to jointly celebrate his birthday along with his wife, daughter and grandson.

It was also a farewell event as Hadi was retiring from the agency.

However, on the sidelines of the ceremony, Hadi announced the BPK’s latest audit on Bank Mutiara’s Rp 1.25 trillion bailout, which was submitted to the House of Representatives on April 18.

The BPK distributed the audit summary to journalists — a surprise move by the agency known to be shrouded in secrecy.

The audit has revealed signs of accounting manipulation and failure by the management to uphold the principal of prudent banking.

The Deposit Insurance Corporation (LPS) was forced to inject the additional capital into the bank on Dec. 23 to meet Bank Indonesia’s (BI) minimum capital requirements due to a sudden surge in the bank’s bad loans.

Bank Mutiara has received more than Rp 8 trillion in bailout funds since the Rp 6.7 trillion injected in 2008 and 2009 due to misappropriation that could have led to the bank becoming insolvent and potentially causing systemic problems for the banking sector.

 In response to the KPK’s decision, Hadi refused to comment much, saying that he respected the legal process.

Hadi was elected BPK chairman in 2009 after serving as an economic analyst with the National Intelligence Agency (BIN) right after his dismissal as the tax boss in 2006.

Who is Hadi Poernomo?

* Finance Ministry director general of taxation, 2001-2006
* National Intelligence Agency (BIN) strategic analysis council head of economic analysis, 2006-2009
* Supreme Audit Agency (BPK) chairman, 2009-2014

Noted actions

* Spearheading the BPK’s audit into the Bank Century bailout, the controversy of which has dogged the administration of President Susilo Bambang Yudhoyono.
* Under his leadership, the BPK launched an audit into the construction of the Hambalang sports complex, which lead to the prosecution of members of Yudhoyono’s inner-circle.
* Stalling reform initiated by former finance minister Sri Mulyani Indrawati at the graft-ridden tax office. (Haeril Halim and Rendi A. Witular)