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Garuda Reluctant to Clean House?

National Airline Criticized for Dragging it Heels in Uncovering Suspected Corruption in Purchase of Airbus Fleet. Trouble Ahead for US$105 Aid Package for Garuda?

(10/7/2006) Tempo Interaktif reports that Garuda Indonesia is considered to be "less than serious" in efforts to uncover suspected corruption in the purchase of six Airbus A-330 aircraft in the mid 1990s.

Didik J. Rachbini, the Chairman of the Parliamentary Commission charged with overseeing State-Owned Enterprises, complained that nearly two months have passed since Garuda's self-imposed deadline of early September when the airline promised to publicly reveal the results of an internal investigation and bring those results to the National Anti-Corruption Commission (KPK).

Didik also told Tempo that he saw a similar lack of serious-mindedness reflected in Garuda's failure to make mention of the Airbus case in the business plan submitted to the Government and the lack of independent actors in the current team steering the airline's restructuring.

Problems Ahead with Garuda's Bailout?

In the current situation Didik emphasized that his commission would take a hard line in opposing the emergency cash injection of Rp. 1 trillion (approximately US$105 million) recently allocated for Garuda. According to Didik, his committee's agreement is a precondition for the subject funds being released to the Airline.

Martono, an airline law expert, told Tempo that Garuda is obligated to address the wide spread suspicion that there was a mark-up in the sale of the aircraft and announce their findings to the public. He said this was even more the case in light of the Government's trust bestowed in the carriers in the form of the recently agreed emergency cash relief. "These funds should be withdrawn, for, if the sickness of corruption still taints the airline, Garuda's recovery will be very difficult," Martono warned.

Garuda's Pilots Association has joined the chorus calling for revelations surrounding the perceived cover up. Captain Stephanus G., the President of the Association, uncovering the details surrounding the case is one of the critical steps in efforts to rescue the national carrier.

The corruption allegations surround the purchase of six Airbus A-330 aircraft in 1996 under a "rental-purchase" agreement valued at US$660 million between Garuda and a multi-partied consortium.

Garuda's Anti-corruption Commission, headed by Ari Sapari, said that his committee is reviewing its report on the transaction before handing it over to the national Anti-corruption Commission. Sapari refused to commit on when the report would be handed to the Government.