Indonesia summons Lippo's James Riady to assist in bribery probe involving $21 bln project

JAKARTA, Oct 30 (Reuters) - Indonesia’s anti-graft agency on Tuesday summoned Lippo Group Deputy Chairman James Riady as a witness in a bribery probe involving a $21 billion construction project, as it cracks down on widespread bribery in Southeast Asia’s biggest economy.

The summons of one of the country’s most powerful executives follows the arrests this month of nine people in connection with the investigation.

The probe comes as President Joko Widodo’s record on graft comes under increased scrutiny ahead of his bid for re-election in April, after a term in office during which vested interests have continued to hold sway in many areas of Indonesia despite some high-profile graft cases.

The most recent case saw arrests on Sunday in a separate bribery investigation involving a senior executive of palm oil firm PT Sinar Mas Agro Resources and Technology Tbk.

At Lippo, construction is underway for its largest-ever project dubbed Meikarta, featuring campuses for the automotive and electronics industries, as well as hotels, shopping malls, universities and housing. It has billed the development as the “Shenzhen of Indonesia”, after China’s booming manufacturing city.

But the future of the project became uncertain this month after the Corruption Eradication Commission, known as KPK, arrested nine people including a Lippo director, two consultants and government officials as part of a bribery probe linked to Meikarta.

It also confiscated what it said was $100,000 in bribe money during a sting operation, and raided dozens of locations including Lippo offices and Riady’s home.

The case has played havoc with Lippo Group stock, with PT Lippo Cikarang Tbk hitting a seven-year low this month and PT Lippo Karawaci Tbk falling to its lowest since mid-2004.

KPK told Reuters it was summoning Riady as a witness for suspects it believes were involved in the bribing of public officials to obtain property permits for Meikarta.

Television footage showed Riady entering the KPK building on Tuesday, dressed in a suit without a tie. He did not respond to questions from reporters. Representatives of Riady and the Lippo Group could not be reached for comment.

KPK spokesman Febri Diansyah said in a text message the agency was investigating whether the alleged bribery involved any “company-wide actions,” and was also looking into the local government’s permit process for the Meikarta project.

Meikarta is located on the outskirts of the capital Jakarta, near the Jakarta-Bandung high-speed train project. The 22 square kilometre project is aimed at leveraging Chinese investment under Beijing’s Belt and Road trade relations initiative, as well as boosting partnerships with Chinese firms, analysts said.

A lawyer working on Meikarta said previously there was no tolerance for corruption and pledged to collaborate with KPK investigators. The lawyer also said there would be an internal probe.

“In the event we find that there was deviation from our anti-corruption principles, we will not hesitate to strictly sanction anyone found guilty according to employment law,” counsel Denny Indrayana said in a statement last week.

China State Construction Engineering Corp (CSEC) is among companies involved in Meikarta, in what it called one of its biggest overseas projects. The firm did not respond to a Reuters request for comment on the ongoing probe.

Reporting by Agustinus Da Costa and Fanny Potkin; Editing by Ed Davies and Christopher Cushing