Pertamina officials named suspects on Karaha Bodas
Friday, May 14 2004 - 12:14 AM WIB
The police, however, declined to identify the suspects or disclose the number, saying this would unduly prejudice the investigation.
"We have questioned a number of Pertamina and Karaha Bodas employees and some of these have been charged as suspects," said National Police spokesman Insp. Gen. Paiman.
An investigator from the National Police's anticorruption squad, who requested anonymity, told The Jakarta Post that the suspects were senior officials from Pertamina and KBC.
Separately, a spokesman for Pertamina, M. Harun, said corruption had long been suspected in the business dealings between Pertamina and KBC.
"We are glad that the police have identified suspects in this case as hundreds of billions of rupiah in public money is at stake. If Pertamina employees were involved in the scandal, then they should be dealt with to the full extent of the law," he told the Post.
American-owned KBC signed a contract with Pertamina in 1994 to construct two geothermal power plants in Garut, West Java. Due to the economic crisis, the government unilaterally terminated the contracts.
KBC brought arbitration proceedings against Pertamina in the Geneva Arbitration Court in 2000 and subsequently won the case. Pertamina was ordered by a panel of arbitrators in Geneva in 2001 to pay KBC a total of $261.1 million in compensation following the shelving of the projects. The award comprised $111.1 million in expenses, plus interest, and $150 million in losses of future profit.
The amount that Pertamina had to pay increased to $290 million due to fluctuations in the interest rate.
KBC is controlled by Florida-based FPL Group Inc. and Caithness Energy LLC of New York, in partnership with local firm PT Sumara Daya Sakti, which is linked to Tantyo Sudharmono, the son of former vice president Sudharmono.
Pertamina unsuccessfully filed two appeals in Switzerland before resorting to the Indonesian courts in a futile effort to thwart the Geneva verdict. KBC, meanwhile, filed numerous lawsuits in the United States, Hongkong, Canada and Singapore to freeze Pertamina assets in those countries.
The U.S. court subsequently froze Pertamina assets worth $290 million.
An oil and gas analyst, Kurtubi, said that the door had been wide open for corruption from the very start of the projects.
"For example, there was no tender process to determine who would get the projects. The involvement of the (former) vice president's son is also questionable. In addition, the $100 million costs claimed by KBC are too high considering that so little work was actually done on the projects," said Kurtubi.
An oil and gas expert from Pertamina, who asked for anonymity, added that Minister of Energy and Mineral Resources Purnomo Yusgiantoro should also be questioned by the police as he headed the team that approved the project.(*)