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Ex-Merpati Execs Named Suspects In $1m Graft Case
August 18, 2011

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The former president and former finance director of state-owned Merpati Nusantara Airlines have been named graft suspects for a leasing deal that fell through.

Noor Rachmad, a spokesman for the Attorney General’s Office, said on Wednesday that Hotasi Nababan, who led the company when the deal was made to lease two planes from a US company in 2006, and former finance director Guntur Aradea had been named suspects the previous day. He identified the two by their initials.

The investigation began on July 7, he added.

Merpati Nusantara signed a deal with US-based Thirdstone Aircraft Leasing Group to lease a Boeing 737-400 and a Boeing 737-500. It paid a $1 million security deposit but never received the planes, nor did it get a refund.

Imam Turidi, a spokesman for Merpati, said earlier the company had filed a lawsuit against Thirdstone in April 2007 for breach of contract.

A district court in Washington, DC, issued a verdict ordering Thirdstone to return the $1 million but the payment never came, the spokesman added. He did not say what further legal steps the company was taking.

On Monday, another former Merpati president, Cuk Suryosuprojo, was questioned as a witness in the case.

Lawyers for the suspects have said the case should be settled in civil court, not criminal court. J. Kamaru, one of the lawyers, said Merpati had the authority to make business deals like the one with Thirdstone without first securing the permission of the State Enterprises Ministry.

The Thirdstone deal came under the AGO’s scrutiny because it suspected the agreement was drawn up without the consent of the minister and because state losses were incurred.

Merpati is also being investigated over its purchase of 15 Chinese-made MA-60 planes, one of which crashed in Papua this year, killing all 25 people on board.

Under a 2006 contract between Merpati and Xi’an Aircraft Industrial Corporation, each aircraft was priced at $14.1 million. It was later discovered that airlines in the Philippines, Ghana and Nepal had bought the same type of aircraft for $11 million each.

Merpati took delivery of the first two planes in mid-2007, but after finding cracks in an important component and facing worsening financial difficulties, it considered canceling the purchase.

The deal was also dogged by concerns that the MA-60s were not certified by the US Federal Aviation Administration, whose guidelines, though not mandatory in Indonesia, are considered the de facto standard for airlines around the world.

Antara