East Kalimantan reports KPC to Police, AG over alleged corruption

The East Kalimantan administration has reported the giant coal mining company PT Kaltim Prima Coal (KPC) to the National Police and the Attorney General Office in Jakarta over alleged corruption, the local Radar Kaltim daily reported on Thursday.

KPC is equally owned by Australia?s Rio Tinto, and BP.

But the paper said that Rio Tinto Indonesia president Noke Kiroyan sent a protest letter to Minister of Mineral Resources and Energy Purnomo Yusgiantoro, urging the latter to ask the East Kalimantan administration to withdraw the report.

The copy of the June 15 letter was also sent to the East Kalimantan provincial parliament, the World Bank, the IMF, Australian Ambassador in Indonesia, and several other government institution and head of the National Police.

Kiroyan said in the letter that the report made by the East Kalimantan administration could further disrupt the divestment process of KPC. He added that it would also discourage foreign investors to enter the country.

Meanwhile, Speaker of the East Kalimantan Parliament Sukardi Djarwoputro said that the administration should not back off.

He said that let the court would decide whether KPC was guilty or not.

He said that the crime charges has nothing to do with the divestment program.

Sukardi said that KPC had claimed that it started production in 1992, while the administration had evidence that the company had already started coal export in 1987.

KPC was supposed to have already divest up to 51 percent of its stake to the East Kalimantan administration. The company had initially rejected such a massive divestment, although it had to finally surrender to the demand. The only problem is price negotiation. The paper said that KPC demanded US$880 million for the 51 percent stake, while the East Kalimantan administration only valued the shares at less than $300 million.