Italian Consultant Denies Skimming Water Program Funds

Jakarta Globe, Heru Andriyanto | April 11, 2011

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An Italian consultant detained by the Attorney General’s Office had no direct role in the alleged pilfering of funds for a multimillion dollar government project, his lawyer claimed on Sunday.

Giovanni Gandolfi, an official from Italy-based engineering company C. Lotti & Associati, was arrested late on Thursday for allegedly falsifying invoices and billing statements for the Water Resources and Irrigation Management Project funded mainly by the World Bank.

Gandolfi, who worked as a consultant for the project, was accused of inflating amounts in payment claims to the government from 2007-09.

Authorities said the funds disbursed to C. Lotti were then deposited in a Bank Mandiri account under the firm’s name.

But the suspect’s lawyer, Yan Apul, blamed the company’s Indonesian partners for the padded amounts. “Actually, the financial documents were submitted by eight local partner companies,” Yan told the Jakarta Globe.

“The documents cover expenses including car and airplane leases, furniture and office equipment,” he said. “The partners met at [Gandolfi’s] office and provided their own billing statement.”

However, Yan acknowledged that his client, as project leader, had the authority to sign off on these documents.

“[Gandolfi] signed the invoices then forwarded them to the [Public Works Ministry’s] director general of water resources,” the lawyer said.

Noor Rachmad, an AGO spokesman, said on Friday that the suspect was “the first foreigner to be arrested by [the office] for a graft case.”

He said Gandolfi would be held at the AGO’s detention facility for 20 days from his arrest.

Based on initial audits from project centers in Jakarta, as well as East and West Java, Noor said state losses were estimated to be around Rp 6.5 billion ($750,000).

“This figure likely to increase because [we are still waiting for data] from 14 provinces covered in the project,” he added.

In recent discussions between the World Bank and C. Lotti, the Italian company admitted that some of the claims had been falsified by Gandolfi, Noor said. The firm agreed to pay the Indonesian government back $350,000.

Contrary to statements by his lawyer, Gandolfi reportedly “realized that the billings were incorrect” and signified his intention to return Rp 3.5 billion worth of funds, according to the AGO.

Noor said this was stated in a letter from C. Lotti dated Jan. 14 this year.

According to the World Bank Web site, the $115.6 million project, approved in 2003, aims to implement water sector reforms.

The International Bank for Reconstruction and Development, the International Development Association and the Dutch government financed $84 million of the project cost.

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