East Kalimantan governor made a suspect in corruption case

East Kalimantan Governor Awang Faroek Ishak has been finally named a suspect in a latest investigation over a corruption case which is estimated to have inflicted a loss of Rp 576 billion to the state due to the sale of PT Kaltim Prima Coal?s (KPC) shares owned by Kutai Timur administration.

Muhammad Amari, Attorney general specialized on special crime, said that Awang was made a suspect because he was involved in the sale of KPC shares owned by PT Kutai Timur Energy (KTE) when he was still the regent of Kutai Timur regency.

Under the Coal Contract of Works (PKB2B) awarded in 1982, KPC is required to divest 51 percent of its shares to the central and local governments. Of the 51 percent divested shares, Kutai Timur regency is entitled to buy 18.6 percent.

On June 10, 2004, Kutai Timur regency transferred its right to buy the KPC shares to PT KTE, a local-government owned firm set up by the Kutai Timur regency. As the KTE had no money, it transferred its right to PT Bumi Resources Tbk, which then gave KTE 5 percent share of the KPC for free.

After asking permission from local legislators, Awang sold the 5 percent share to PT Kutai Timur Sejahtera at the price of US$63 million. ?But the money from the sale of the shares was not recorded as the asset of the local government. In a shareholders general meeting of PT KTE in Jakarta, Awang decided to use Rp 480 billion of the money to invest in Samuel Sekuritas, Rp 72 billion investment in PT CT, an a consultant fee of Rp 5.7 billion to PT Ditara Saidah Tresna,? Amari said. (*)