From Indonesia Today

Pertamina & McKinsey scandal

In the last few weeks, Koran Tempo consistently run the story about ellegation that state-owned oil and gas company PT Pertamina appointed US consulting firm McKinsey without proper tender. Pertamina agrees to pay around US$15 million to McKinsey as consultant for transformation program.

Pertamina president Ari Soemarno claimed that the company had invited five consulting firms, but only three companies submitted proposals and participate in the beauty contest. They're Boston Consulting Group (BCG), PricewaterhouseCoopers (PwC), and McKinsey. Both BCG and PwC were Pertamina's consultants for restructuring program few years ago.

"It's such a waste of money. We paid huge amount of consulting fees to BCG & PwC in the last few years, but no significant change at Pertamina. The problem at Pertamina is not because they don't know what to do, but they just don't want to do something," an analyst of SOE said.

He also disclosed how state-owned companies love to spend money hiring these costly international consulting firms only to look good while these consulting firms deploy junior-unexperienced 'expert', knows nothing about the company, the country, the society.

"They come with all the expenses paid by the SOEs on first class flights, 5-star plus hotels, yet they can't even communicate with the staffs because they don't speak Indonesian language. Many times, these consulting firms also managed to lobby people at SOE ministry. I think SOEs spend hundreds of million dollars per year to pay these consulting firms," an executive at SOE said.

It's good if Supreme Audit Agency (BPK) would audit all these "consulting" costs.
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