East Kalimantan refuses to withdraw legal threat against KPC
Thursday, July 5 2001 - 02:12 AM WIB
The paper quoted East Kalimantan Governor Suwarna Abdul Fatah as saying that although Rio Tinto, KPC shareholder, had sent a letter to Minister of Mineral Resources and Energy Purnomo Yusgiantoro to ask the province to back down, the administration would go ahead with its move to bring the company to the court over alleged corruption crime.
?Let them (Rio Tinto) ask for the help of the minister to put a pressure on us ? But we?re determined to go on, and we won?t back away,? Suwarna told Radar Kaltim.
The administration has recently reported KPC, which has a vast coal mining operation in the province, to the Attorney General?s Office (AGO) and the National Police in Jakarta over alleged corruption crime.
Local legislators have backed up the administration?s move.
The paper did not clearly described the corruption made by KPC, but the provincial administration had mentioned one example: KPC has claimed that it only started operation in 1992, but the province had evidence that the company had already started operation and export activity since 1987.
In its report to the National Police and AGO, the East Kalimantan administration said that KPC had violated the country?s corruption law.
Radar Kaltim said that KPC management team including Alexander F., Lex Gaefe, Philip David, David D. Born, and Mira Vandi as suspects.
KPC is equally owned by Rio Tinto mining group and BP.
Rio Tinto recently sent a letter to Purnomo, with copies also sent to top institution in Jakarta and East Kalimantan, ask the East Kalimantan administration to withdraw the indictment because it would only hurt investors confidence in the country.
The local administration and KPC had been in a dispute over the latter?s obligation to divest its shares to the local government. KPC is required to divest up to 51 percent immediately, but the company initially rejected the demand saying that according to existing ruling, it was only obliged to divest 37 percent stake. Jakarta then interfered, demanding KPC to divest up to 51 percent shares, but the company until now had not yet implemented the divestment program as it was still in tough negotiation with the price. The local administration has said that the price asked by KPC was too high.(*)