Jakarta raids home of Lippo deputy chairman in bribery probe

Construction of flats at the Meikarta project in Bekasi this week. The raids come after the arrests of two Lippo consultants and an employee accused of trying to pay off city officials to obtain property permits for the project.
Construction of flats at the Meikarta project in Bekasi this week. The raids come after the arrests of two Lippo consultants and an employee accused of trying to pay off city officials to obtain property permits for the project.PHOTO: REUTERS

It is among 10 sites targeted in case linked to conglomerate's $29b real estate project

JAKARTA • Indonesia's anti-graft agency yesterday said it had raided 10 locations, including the home of Lippo Group deputy chairman James Riady, as part of a bribery investigation linked to the conglomerate's US$21 billion (S$29 billion) Meikarta real estate project.

The raids come after the Corruption Eradication Commission, known as KPK, arrested two Lippo Group consultants and an employee accused of trying to pay off city officials to obtain property permits for Meikarta.

Costing US$21 billion and billed as the "Shenzhen of Indonesia", after the booming Chinese city, Meikarta is Lippo's largest project to date and is meant to be a centre for the automotive and electronic industries. It will include five-star hotels, shopping malls, hospitals and universities.

Mr Febri Diansyah, a spokesman for the KPK, said in a text message that its investigators had seized financial documents and computers during the raids.

The raids targeted the home of Mr Riady, a Lippo Group office and the home and offices of top local government official Neneng Hasanah Yasin, one of nine suspects arrested by the KPK this week.

Ms Yasin, Mr Riady and other representatives of the Lippo Group did not respond immediately to requests for comment.

The KPK said Lippo employees detained this week said they had been acting on instructions from Lippo director Billy Sindoro to bribe Ms Yasin, who is the regent for West Java's Bekasi area where the Meikarta project is located.

Investigators have confiscated 513 million rupiah (S$47,000) and $90,000 that they said had been intended as bribe money and suspect other instances of corruption.

  • BUSINESSES ASSOCIATED WITH LIPPO IN S'PORE

  • • OUE LIMITED: A listed real estate firm with a presence in Asia and the United States. Executive chairman Stephen Riady is an executive director at Lippo Limited.

    OUE's assets in Singapore span the hospitality and retail, commercial and residential sectors. Examples are hotels Mandarin Orchard Singapore and Crowne Plaza Changi Airport, as well as OUE Downtown and One Raffles Place Shopping Mall.

    • AURIC PACIFIC: An investment holding firm involved in various consumer businesses here, such as food manufacturing.

    It owns the Food Junction foodcourts and Delifrance cafes. Auric's flagship brands include SCS butter and Sunshine bread, which are household names.

    • FIRST REAL ESTATE INVESTMENT TRUST: A Singapore-listed healthcare real estate investment trust. Its portfolio, while dominated by medical facilities in Indonesia, also comprises nursing homes here.

    They are Pacific Healthcare nursing homes in Bukit Panjang and Bukit Merah, which has more than 200 beds each; as well as the 208-bed The Lentor Residence at Lentor Avenue.

Mr Sindoro has also been arrested, as well as four other public servants. Lawyers for Mr Sindoro and Ms Yasin have not responded to requests for comment.

Investigators have confiscated 513 million rupiah (S$47,000) and $90,000 that they said had been intended as bribe money and suspect other instances of corruption.

Counsel for Meikarta has told Reuters that there was no tolerance for corruption at the company and pledged to cooperate with KPK investigators.

 
 

Lippo Group shares have dropped since the investigation was made public. Shares of the company's flagship real estate developer company, Lippo Karawaci, fell 2.78 per cent yesterday, with its dollar bonds near record lows, while Lippo Cikarang shares were down 18 per cent this week.

Meikarta's parent company is Mahkota Sentosa Utama, a 49.99 per cent-owned subsidiary of Lippo Cikarang, which is 54 per cent-owned by Lippo Karawaci.

Moody's said yesterday that the alleged bribery incident would be credit negative for Lippo Karawaci, while S&P Global Ratings noted that it risked weakening the firm's already fragile liquidity.

REUTERS

A version of this article appeared in the print edition of The Straits Times on October 19, 2018, with the headline 'Jakarta raids home of Lippo deputy chairman in bribery probe'. Print Edition | Subscribe