Attorney General: Four graft cases found in oil contracts<\/p>\n
JAKARTA (JP): The Attorney General's office said on Monday
\nthat thus far it has found only four contracts entered into by
\nstate oil and gas company Pertamina during former President
\nSoeharto's era with \"preliminary evidence of corruption\".<\/p>\n
Attorney General Marzuki Darusman said the four contracts
\nwere selected out of the 159 contracts and project proposals with
\n\"indications of corruption\" submitted by Pertamina to the
\ngovernment after the downfall of Soeharto in 1998. All the 159
\ncontracts and project proposals involved Soeharto's family and
\ncronies.<\/p>\n
The four contracts were all oil and gas Technical Assistance
\nContracts (TAC) entered into by Pertamina and PT Ustraindo
\nPetrogas, he said.<\/p>\n
He did not name the owner of Ustraindo but Pertamina's sources
\nsaid it was owned by Praptono H. Hupojo, a relative of Soeharto's
\nlate wife.<\/p>\n
\"We upgraded the preliminary investigation into the four cases
\nto a full investigation on Nov. 15,\" Marzuki said in a hearing
\nwith the House of Representatives' Commission VIII, which
\noversees mines and energy affairs.<\/p>\n
He said his office found irregularities in the signing of the
\nfour TACs that led to state losses of some US$18.99 million in
\ntotal.<\/p>\n
The TAC scheme was created by Pertamina to help local
\nbusinessmen who mostly do not have the financial capability to
\nfinance oil and gas exploration activities. Under the contract,
\nPertamina gives its wells, which have already proven reserves, to
\nlocal businessmen for exploitation.<\/p>\n
Pertamina signed the four TACs between 1992 and 1993 for its
\noil fields in Pendopo, South Sumatra; Jatibarang in West Java;
\nPrabumulih in South Sumatra; and Bunyu in East Kalimantan.<\/p>\n
Marzuki said that the TACs signed between Pertamina and
\nUstraindo had terms which violated existing regulations on TACs.<\/p>\n
Under its contract, Ustraindo were freed from paying costs,
\nwhich under TAC regulations should be borne by Ustraindo.<\/p>\n
Instead, Pertamina had to pay the costs, which totaled $18.99
\nmillion.<\/p>\n
Marzuki said thus far his office had examined 74 of the 159
\ncontracts and project proposals reported by Pertamina to the
\ngovernment. Of the 74 examined cases, 52 contained no indications
\nof alleged corruption, collusion and nepotism practices.<\/p>\n
The 52 cases, he said, were either still in the form of
\nproposals or memorandum of understandings, that were unable to
\ninflict losses to the state.<\/p>\n
Some others were oil and gas business licenses, which
\nPertamina granted to private companies that could not cause
\nleakages in state income, he said.<\/p>\n
However, the Attorney General's office found 22 contracts that
\nmight have been awarded through corrupt practices, 17 of which
\nwere still being probed.<\/p>\n
Of the remaining five, so far only the cases involving
\nUstraindo's contracts had been upgraded to a full investigation,
\nMarzuki said.<\/p>\n
The Attorney General's Office also said it had not found
\nenough evidence yet to launch a full investigation into the high-
\nprofile corruption case of the Balongan oil refinery.<\/p>\n
The US$2.4 billion refinery in Indramayu, West Java, was built
\nfrom 1990 to 1995 by a consortium of contractors led by Foster
\nWheeler of Britain.<\/p>\n
The cost of the project was allegedly marked up, with
\nlegislators citing the realistic cost to be around $1.6 billion.<\/p>\n
Marzuki said that the initial indication of corruption in the
\nBalongan project, was the various estimations of its realistic
\nvalue.<\/p>\n
Parties involved in the development of the project gave five
\ndifferent cost estimations, ranging from $938.6 million to $1.999
\nmillion, he explained.<\/p>\n
But he said the various cost estimations of the project's
\nrealistic value could not be classified as preliminary evidence
\nof corruption.<\/p>\n
According to him, a physical audit of Balongan's equipment and
\nstructure is required to assess its real value.<\/p>\n
Marzuki further reported his office's progress in
\ninvestigating alleged corruptions in the Paiton I independent
\npower plant project.<\/p>\n
He said that although his office found possible
\nirregularities, they were too weak for his office to launch a
\nfull investigation.<\/p>\n
State electricity company PLN suspects mark up practices in
\nin the development of the Paiton I project, that eventually
\ncaused PLN to pay Paiton higher than average power prices.<\/p>\n
The Paiton I power plant is being operated by a consortium of
\nPT Batu Hitam Perkasa, the American-based Mission Energy Company
\nInternational and General Electrics, and Japan's Mitsui & Co.
\n(bkm)<\/p>",
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