Govt audit agency accuses KBC of manipulating investment data
Friday, July 26 2002 - 03:29 AM WIB
Kompas daily reported on Friday that BPKP had found that KBC had overstated the data on its investment spending or formally known as the realization of work program and budget (WPB). In a document sent to Pertamina, KBC claimed that the realization of its WPB reached US$77.13 million, while those sent to the tax office, the international arbitrary body, and PricewaterhouseCoopers totaled $84.895 million, $93.10 million and $40.183 million respectively.
BPKP?s audit shows that there is an overstate of $19.168 million because the realization of exploration and drilling spending stated in the WPB totaled $59.263 million while from the recapitulation of the daily spending on the company?s exploration and drilling works from 1995 to 1998, the total amount reached $40.094 million.
BPKP also found that there was a potential shortage of about Rp 5.974 billion in KBC?s tax income payment, and of Rp 12.242 billion in valued added tax (VAT) payment.
In the audit of the company?s technical aspect, BPKP also found that the company?s claim that the project had the capacity to produce electricity of 210 MW was baseless. According to BPKP, based on notes taken from a joint committee meeting between KBC and Pertamina on August 12 1997, the power project had a generating capacity of 55 MW and was increased to 60 MW on September 1997.
"The increase in the generating capacity from 55 MW to 210 MW only in three months is impossible," the government?s audit agency said.
Meanwhile the U.S. district court of South Texas district issued a ruling last week supporting the decision of the international arbitrary agency?s decision in 2000 to order Pertamina to pay claim of $261 million to KBC. The court turned down the appeal made by Pertamina to cancel the international arbitrary agency?s decision.
KBC?s lawyer Mohammad Saleh said that the court also ordered the state owned oil and gas company to stop its legal suit against KBC in the Indonesian court.
The dispute centers on Karaha, which is principally backed by U.S. companies FPL Energy and Caithness Energy, entering into contracts with Pertamina and another local company in 1994 to develop the Karaha Bodas geothermal project in West Java.
The Indonesian government, however, cancelled the project as part of the retrenchment program to cope with the impact of the crisis hit Indonesia in late 1997. KBC then sued Pertamina through international arbitrators and asked Pertamina to pay compensation for the money it had spent on the project. (*)