East Kalimantan defends lawsuit against KPC
Friday, October 19 2001 - 01:00 AM WIB
The government of East Kalimantan on Indonesian Borneo has filed the suit against KPC, which operates a huge mine in the province. The firm is owned equally by Anglo-Australian mining company Rio Tinto Plc and BP Plc.
A disagreement between the mining firm and the central government over the price for shares has delayed the divestment. The company said the lawsuit could deter future foreign investors in Indonesia.
"We have filed the civil case against KPC because we deem that it has breached its contract with the (central) government," said Syaiful Teteng, an assistant to the East Kalimantan governor dealing with the lawsuit.
"They keep postponing what they are required to do in the contract but on the other hand, keep their mining operations on course," Teteng told AFP.
The local administration was suffering losses because of the delay in receiving proceeds from the divestment, Teteng said, adding that the hearing had been tentatively set to start in Jakarta on October 23.
East Kalimantan is seeking $772 million in damages and four million in legal costs and is also asking the court to seize the firm's assets.
KPC, in a statement obtained Thursday, decribed the lawsuit as "baseless" and said it would be vigourously defended.
"KPC and its shareholders believe that the action taken by the regional government will cause concern to all existing and potential investors in East Kalimantan specifically and Indonesia as a whole, and may deter future investment in the country."
KPC said its original agreement with the central government stipulated that 51 percent of the firm would be divested in stages by 2001 to the Indonesian government, Indonesian nationals or Indonesian companies controlled by Indonesians.
But it said the two sides could not agree on price, with the government assessing the total value of its shares at between 583-625 million dollars. KPC said its valuation was 889 million.
The firm urged the appointment of two independent valuers, one for each side, as specified in the original contract.(*)