Pertamina sues Swiss bank over frozen deposit

State-owned oil and gas company PT Pertamina has filed a lawsuit for US$9 million against Swiss bank Credit Suisse, Investor Indonesia newspaper reported in its Monday edition.

This action was taken after the bank refused to release the frozen deposit money belonging to its subsidiary Pertamina Energy Trading Limited (Petral).

Pertamina was seeking the return of a deposit frozen following a probe into possible fraud at Petral.

Petral?s president director Ari Soemarno said they had filed the suit for the recovery of funds it put in an interest-earning fixed deposit account in February 2002.

"The offshore bank has failed and refused to repay the money upon a demand for its return," Soemarno, who was appointed by Pertamina last month to replace Sungkono Wahju as the head of Petral, said in a statement sent to Reuters late on Friday.

Soemarno's statement did not specify an amount of money.

A source at the law firm Haq & Selvam said the firm had filed and served a writ of summons on behalf of its client, Petral, in the Singapore High Court against the Swiss bank on December 16.

The source, who declined to be identified, said the suit was for the recovery of $9 million.

Ariffi Nawawi, Pertamina's president director, said on Wednesday, that Pertamina was investigating a possible fraud involving $8.2 million at Petral's Singapore unit.

Singapore said on Friday it was investigating the case.

The lawyer handling the Credit Suisse defense, which will be presented in court in January, said the bank had notified Petral it would exercise its right to cut off a separate trade facility, or loan account, which Petral had drawn down.

"A loan was given for $8 million, in effect, and the bank gave notice that it would exercise its right to set off the loan against the money standing in Petral's fixed deposit account," Muralli Pillai, a partner at the law firm of Allen & Gledhill said in a telephone interview on Friday.

Singapore's white-collar crime unit said on Friday it had been investigating the local unit of Petral for nearly eight months for possible fraud.

"A report has been lodged on this matter and police investigations are ongoing," Lim Lu-Ern, spokesman for Singapore's Commercial Affairs Department, told Reuters.

The report was lodged in late April, Lim said, without giving details.

Soemarno said Pertamina's investigation did "not concern any bank or its activities and trade, or relate to any trade-related activities of Petral or any of its sister companies."

The source at Haq & Selvam said the police investigation raised the possibility that a forged letter had been used to withdraw $8.2 million from Petral's accounts.

"That's the thing that everybody is trying to find out, including the police, but so far, nobody has got anywhere," he said, when asked who might have forged the letter.

Pillai, who was reached after office hours and did not have access to his files, said he could not say for sure whether Petral's trade facility was drawn down in one transaction or over time.

"As far as the allegation of forgery is concerned, the bank simply executed the instructions given it," Pillai said.

Petral was incorporated in 1992 as a wholly owned subsidiary of Pertamina to market Indonesian crude and oil products and to buy foreign crude and products for the state-owned oil firm.

In 2002, the Petral Group moved more than 140,000 barrels a day (bpd) of crude and 181,000 bpd of oil products, according to its Web site (www.pnatrade.com).

Petral enjoys a concessional Singapore corporate tax rate of 10 percent. The standard rate is 22 percent. (*)