Watchdog Leaks Collusion Claims in Jakarta MRT Project

An antigraft watchdog on Thursday leaked evidence from a probe of Jakarta’s much-delayed Mass Rapid Transport project, which it said involved collusion in selecting the designer of the system, a contract worth Rp 180 billion ($18.9 million). At a news conference in Jakarta on Thursday, Indonesia Procurement Watch revealed a Nov. 5 letter from the chairman of the Business Competition Supervisory Commission (KPPU), Benny Pasaribu, addressed to the Transportation Ministry. In the letter, Benny wrote that the KPPU had found preliminary evidence of “collusion” on the part of the ministry and among the bidders for the project to award the design contract to Japanese engineering firm Nippon Koei. A KPPU spokesman, Ahmad Junaidi, confirmed that the commission had sent the letter to the Transportation Ministry, but declined to comment further. The commission has been investigation the collusion claims since September. In the letter, the KPPU advised the ministry to hold the tender process again, and warned it to follow proper regulations regarding the procurement. If the project is put up for bid again, the MRT schedule would be thrown into turmoil. The train’s first line is due to open in 2016. A Transportation Ministry official later on Thursday said that the KPPU’s allegations were unfounded. The tender process for the MRT design project started in mid-2008 and ended in September when the ministry announced that Nippon had been awarded the contract. The Japan International Cooperation Agency is providing funding for the entire transit system, which is being disbursed by the Finance Ministry. “The KPPU has found evidence that Nippon Koei was appointed as a consultant to the project in 2005, well before the tender results were ever announced,” said Hayie Muhammad, who directed IPW’s investigation into the case, which the watchdog originally brought to the KPPU’s attention. With Nippon’s earlier role in the project, the KPPU letter said it was “inevitable” that it would be named the designer. The tender process was also suspicious, Hayie said. In October 2008, another competitor, Pacific Consultants International, suddenly withdrew from the bidding under “suspicious circumstances,” the letter said, revealing “possible collusion between Nippon and PCI.” Last November, another Japanese bidder, Katahira & Engineers International, was thought the most qualified according to an internal evaluation by the tender committee. But shortly after its report was issued, the group’s members were replaced and Nippon was elevated to the most-preferred designer, the letter said. Bambang Ervan, spokesman for the ministry, responded to the allegations, saying the KPPU findings were unjustified. He “could not believe” that Nippon had been on board as a consultant in 2005 because no serious work had started at that time. “The tender to determine even the most basic design for the project was not initiated until 2008,” he said. Bambang said the tender committee that selected Katahira was abruptly replaced after JICA found fault with its evaluation. As for PCI, JICA had blacklisted it after company executives were investigated for bribery in a road project in Vietnam, he said. The executives were later found guilty of the charges. “According to a presidential directive, if there are signs of unhealthy competition, the contract should be terminated,” Hayie said, adding that the KPPU should pass on the information to the Corruption Eradication Commission (KPK) to investigate the Transportation Ministry’s dealings with Nippon.

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