Indonesia anti-trust scandal threatens credibility

By Andreas Ismar

JAKARTA, Sept 18 (Reuters) - The credibility of Indonesia's anti-trust agency, launched eight years ago, has been thrown into question by an unfolding bribery scandal, an independent graft watchdog and a former official said.

Indonesia's anti-corruption agency said on Wednesday Mohammad Iqbal, an official at the anti-trust body, was a suspect in a case involving broadcast rights after being caught receiving 500 million rupiah ($53,160) from a businessman at a luxury hotel.

The head of Indonesia Corruption Watch described the scandal at the agency, known as KPPU, as a "complete disappointment".

"Now every KPPU decision will be questioned, whether those decisions have been reached fairly or were there any bribes involved," Teten Masduki said by telephone.

KPPU was involved in a controversial ruling last year forcing Singapore state investor Temasek Holdings [TEM.JUL] and its affiliates to sell one of their telecom units in Indonesia.

Former KPPU chief Sutrisno Iwantono said if the bribery case was proved it could inflict huge damage.

"If it is true, it means that he has ruined the KPPUs credibility that has been built up for the past eight years," Iwantono was quoted by the state Antara news agency as saying.

Iqbal is currently detained but his lawyer, Imron Halimy, said his client was not aware there was money in the bag.

"He was only told this is a present and he didn't check," said Halimy, who is part of the legal team at KPPU.

"KPPU is convinced that there's no relationship" between the money and the agency's decisions, he added, saying that KPPU would cooperate fully with the investigation.

Chandra Hamzah, an anti-graft agency official, said on Wednesday the alleged bribe was suspected to be related to a monopoly decision involving Direct Vision, partly owned by First Media (KBLV.JK), a unit of the Lippo Group owned by tycoon James Riady.

A corporate secretary at First Media had declined to comment on the case on Wednesday.

Iqbal, who joined the agency when it was founded, was a member of KPPU's commission that ruled in August that Direct Vision had not violated Indonesia's anti-monopoly law in a case related to TV broadcast rights for the English Premier League, according to KPPU's web site (www.kppu.go.id).

In the recent high-profile Temasek case, Indonesia's Supreme Court turned down an appeal by the Singapore state investor, which denied engaging in anti-competitive behaviour and said it owned minority stakes in the two local mobile operators.

Temasek, through its units, has held stakes in PT Telekomunikasi Selular (Telkomsel) and PT Indosat Tbk (ISAT.JK), the top two mobile operators in Southeast Asia's largest economy.

While the appeal process was on, in June, Singapore's ST Telemedia, a wholly owned unit of Temasek, sold its stake in Indosat to Qatar Telecom QTEL.QA for $1.35 billion.

Temasek, through Singapore Telecommunications Ltd (STEL.SI), still holds 35 percent of PT Telekomunikasi Selular (Telkomsel), Indonesia's largest mobile phone operator with more than 50 percent share of the total subscribers.

Temasek declined to comment on Thursday.

Since coming to power four years ago, President Susilo Bambang Yudhoyono has pledged to tackle endemic graft.

Many high-ranking Indonesian officials, parliament members, bankers and executives have been jailed, although critics say some of the worse cases of graft have yet to be tackled. ($1=9405 rupiah) (Additional reporting by Telly Nathalia and Harry Suhartono in Jakarta and Daryl Loo in Singapore; Writing by Ed Davies; Editing by Jerry Norton)