Erick Thohir Ends Potential Corruption, Response From Krakatau Steel Boss: Debt Piles Rp31 Trillion Because Investment Has Not Generated

Krakatau Steel Factory. (Photo: Instagram @erickthohir)

JAKARTA - Minister of State-Owned Enterprises (BUMN) Erick Thohir said there were indications of hidden corruption in PT Krakatau Steel (Persero) Tbk (KRAS). The indication comes from KRAS's debt which reaches US$2 billion or around Rp31 trillion.

Furthermore, Erick said that the debt came from Krakatau Steel's investment which reached 850 million dollars. The company previously invested the funds in a blast furnace project.

In response to this, the President Director of Krakatau Steel, Silmy Karim, said that the trend of increasing debt started in 2011 to 2018. The accumulated debt of Krakatau Steel reached Rp. 31 trillion due to several things. One of them is investment spending that has not yet yielded according to the plan.

Silmy said, the new management of Krakatau Steel succeeded in restructuring its debt in January 2020. So that the installment and interest expenses became lighter in order to improve financial performance.

"The blast furnace project was initiated in 2008 and entered the construction period in 2012, long before I joined Krakatau Steel at the end of 2018. The current management has found a solution so that previously idle facilities or factories can be productive," he said in an official statement. , Tuesday, September 28.

Silmy said that currently Krakatau Steel already has two potential strategic partners, even one candidate has signed a Memorandum of Agreement (MOA) with Krakatau Steel. Another partner has submitted a letter of interest to cooperate in the blast furnace.

Furthermore, Silmy said that with this strategic partner, there was already a solution for the blast furnace project. It is targeted that the second quarter of 2022 will be operational.

"The operation of the blast furnace will use technology that maximizes domestic raw materials, namely iron sand. The use of iron sand will save production costs and reduce imports of raw materials from abroad, namely iron ore," he said.

Silmy said, all these efforts were supported by corruption-free management. Moreover, he said, Krakatau Steel has implemented ISO 37001:2016 since August 2020 as an effort to prevent and eradicate KKN.

Furthermore, Silmy said, this is an international standard that can be used by all jurisdictions and can be integrated with the management system that Krakatau Steel currently has.

"The relationship with indications of irregularities/corruption in the past is certainly a concern for management. My focus when joining was to find a solution and look forward so that Krakatau Steel can survive first," he said.

According to Silmy, one by one the problems at Krakatau Steel have been addressed by the new management. Starting from companies that have not been profitable for a long time, factories that are not efficient, or projects that have not been completed.

"Many have been completed and the rest have been found solutions," he said.

Previously reported, Minister of State-Owned Enterprises (BUMN) Erick Thohir said there were indications of hidden corruption within PT Krakatau Steel (Persero) Tbk, or KRAS. The indication comes from KRAS's debt which reaches US$2 billion or around Rp31 trillion.

Furthermore, Erick said that the debt came from Krakatau Steel's investment which reached 850 million dollars. The company previously invested the funds in a blast furnace project.

"Krakatau Steel has a debt of 2 billion US dollars. One of them is an investment of 850 million US dollars, that is not good, there must be indications of corruption," he said.

Erick said that the Ministry of SOEs would also investigate the alleged crime. According to Erick, law enforcement is a process of fixing a wrong business.

"And we will pursue anyone who causes harm. Because this is back, it's not that we want to blame, but law enforcement on businesses, we correct wrong processes," he said.