Supreme Audit Agency Chief: Jiwasraya Case Is Our Priority

TEMPO.CO, Jakarta - THE Supreme Audit Agency (BPK) has a plethora of cases to work on. For this year alone, it targets to crack 29 cases that came from the central and regional governments, state-owned enterprises (SOEs) as well as regional government-owned enterprises. “We prioritize the ones that cause massive losses to the state,” said BPK Chief Agung Firman Sampurna in the special interview with Tempo at this office last Thursday, January 23.

ONE of the cases that came under BPK’s close scrutiny is the alleged fraud at the state insurance company, Asuransi Jiwasraya. The company’s failed investments have led to a Rp13.7 trillion state loss. The BPK had already suspected that something was amiss during its audit on the company back in 2006. Now, the agency is collaborating with the Attorney-General’s Office (AGO) which is investigating suspected corruption in the case and has already named five suspects.

Agung said that unraveling the case is of the agency’s urgent concern given its massive scale as well as the need to restore the insurance industry’s credibility, to recoup customers’ money and to maintain investor confidence. “There are 7.7million clients as well as 17,000 investors including foreign investors in the JS Saving Plan,” disclosed Agung, 48, referring to the investment product which lies at the heart of the Jiwasraya fiasco.

To Tempo reporters Mahardika Satria Hadi and Aisha Shaidra, Agung talked about the challenges the BPK faced in handling a myriad of cases, reform efforts within the agency, the prevalent practice of buying and selling audit results as well as efforts to maintain the agency’s neutrality. He also discussed several cases but declined to be quoted. Excerpts:

How did BPK pick the 29 cases for examination?

Investigative audits are costly. Therefore, we focus on cases that potentially cause huge losses to the state. We should not be spending – say Rp750 million – for investigation just to recoup Rp200 million. That’s inefficiency.

How do you choose them?

We pick out of 200 to 300 cases that are considered necessary to be probed further, primarily for investigative audits and calculating state losses. There are several levels in the process, public complaints, request for an audit, review of preliminary information, etc. Then we determine which cases should be audited.

What are BPK’s priority cases?

We will handle them all this year but we certainly prioritize Jiwasraya. (Apart from the Jiwasraya case and alleged corruption at Asuransi Sosial Angkatan Bersenjata Republik Indonesia or Asabri [the armed forces’ social insurance company], Agung declined to give further details of other cases being investigated by the BPK.)

How do BPK and AGO work together on the Jiwasraya case?

The AGO conducted searches (the suspects’ wealth and assets) and handed over (the findings) to us and we investigate. However, we also do investigative audits at the same time. So, we synergize the activities.

What is the core problem in this case?

The Jiwasraya problem is not new. We’ve long monitored and conducted an audit in 2006. We even run a special SPI (Internal System Control) audit in 2011 where we saw that the entity has had problems from the start. Then they escalated very quickly. We decided to do an investigative audit in 2018. At the height of very intense political activities last year, we temporarily halted several audits to avoid unrest but resumed later to support the law enforcement process.

Jiwasraya failed to pay out claims several times. Did the BPK detect them from the beginning?

We knew that it already had problems in 2007. Before that, they did window dressing (an attempt to present improved financial statements or business portfolios to attract investors). From the SPI audit, we saw that the company did not carry out the corporate risk assessment at that time.

What violations did the BPK find?

Relating to investment policies. That time we didn’t realize the case was as complex as it is now because we only audited Jiwasraya, not relating to other issues. We thank the law enforcement agencies working on this case because they helped us identify potential state losses. With the state losses, the case can be classified as criminal corruption. Otherwise, it will be just a capital market fraud.

The attorney-general said that the potential state losses amount to Rp13 trillion. Is the number likely to go up?

Yes, around that number. But we are still identifying and calculating. The AGO and BPK are both involved in resolving the case to ensure that all investors are legally protected. Because there are 7.7 million customers and 17,000 investors including foreign investors in the JS Saving Plan.

Where did so many investors come from?

I can’t disclose that. We hope that the case will not create a commotion. We were compelled to use law enforcement as the case cannot be handled without it.

Read the full interview in Tempo English Magazine