New York court to open session on Pertamina?s US accounts this month

The New York court of appeal may open a session in the middle of this month to decide on the amount of funds stashed by Indonesia?s state oil and gas firm Pertamina at two American banks which can be seized by independent power producer Karaha Bodas Company (KBC), Pertamina?s legal officer told Petromindo.Com Friday.

The appeal court had asked the New York district court to calculate the exact amount of funds in Pertamina?s accounts at Bank of America (BoA) and Bank of New York (BoNY) before seizing five percent of them.

?The court of appeal may open a hearing to look into the matter in the middle of this month,? Simson Panjaitan said.

The New York district had ordered BoA and BoNY to freeze US$261 million in Pertamina?s accounts upon KBC?s request, while the New York appeal court had ruled that 95 percent of Pertamina?s accounts at the banks belonged to the Indonesian government while Pertamina owned the remaining 5 percent.

Simson said Friday the New York district court had not revealed the results of its calculation on the amounts of Pertamina?s accounts in the two banks.

He said that five percent of the bank accounts was $20-24 million only, according to Pertamina?s calculation, while KBC insisted that it reached $300 million. ?$300 million is too big,? Simson said.

Pertamina and KBC, a Cayman Islands-registered company owned by American investors, had been involved in a prolonged legal battle over a geothermal power project in Karaha Bodas village in West Java. KBC had signed a cooperation agreement with Pertamina and state power company PLN to develop the power project.

However, the Indonesian government in 1998 suspended the development of its Karaha Bodas power project after the country was hit by severe economic crisis. Not happy with the decision, KBC sued Pertamina and the Indonesian government in a Switzerland-based panel of arbitrators, which then issued a ruling in favor of KBC.

The panel ordered Pertamina to pay KBC compensation of $261 million, which Pertamina refused to follow on the ground that the amount was too big and that KBC had received an insurance payment.

KBC then reported the Karaha Bodas case to the New York district court and others namely the Houston, Delaware, Canada, Hong Kong and Singapore courts. Meanwhile, Pertamina filed the case to the central Jakarta district court, asking it to annul the decision of the Switzerland-based arbitrators panel. (leo)