Latief defends business accords with Freeport<\/p>\n
JAKARTA (JP): PT ALatief Corporation (ALC) defended on
\nSaturday its business deals with PT Freeport Indonesia, saying
\nthat such transactions are normal and fair.<\/p>\n
\"Therefore, we'll take legal measures against those who accuse
\nALC's business (with Freeport) of smacking of corruption,
\ncollusion and nepotism,\" ALatief Corp president Usman Ja'far said
\nin a statement.<\/p>\n
The statement was made amid controversy about alleged
\ncorruption and collusion involved in Freeport's operations after
\nit renewed its contract in 1991 to operate a huge copper and gold
\nresource in Grasberg, Irian Jaya.<\/p>\n
The controversy was set off by American scholar Jeffrey A.
\nWinters, who noted in Jakarta early last week that Coordinating
\nMinister for Economy, Finance and Industry Ginandjar Kartasasmita
\nhelped his friends and family get stakes and win projects in
\nFreeport.<\/p>\n
Ginandjar was the minister of mines and energy when Freeport
\nrenewed its contract.<\/p>\n
Winters, quoting local research agency Econit's reports and
\nAsian Wall Street Journal's Sept. 30 edition, said Ginandjar was
\ninvolved in collusive practices which enabled Bakrie Group's
\npresident Aburizal Bakrie to acquire stakes in Freeport and
\nALatief Corp's chairman Abdul Latief to acquire Freeport's
\nnoncore business in his mining fields in Irian Jaya.<\/p>\n
Bakrie, through its subsidiary PT Indocopper Investama
\nCorporation (IIC), bought a 10 percent stake shortly after
\nFreeport renewed its contract, while Latief acquired Freeport's
\nnoncore business in 1992.<\/p>\n
Freeport Indonesia is 81.28 percent owned by giant U.S. mining
\ncompany Freeport McMoRan Copper & Gold. The remaining shares are
\nowned by the Indonesian government (9.36 percent) and IIC (9.36
\npercent).<\/p>\n
IIC is 50.48 percent by PT Nusamba Mineral Industri, and the
\nremaining shares owned by Freeport McMoRan (49 percent) and
\nmembers of the public (0.52 percent)<\/p>\n
Angered by Winters' claims, President BJ Habibie ordered the
\npolice to investigate Winters on charges of defaming Ginandjar
\nand the Indonesian government.<\/p>\n
The police have questioned several people, including
\nGinandjar, Freeport's president Adrianto Machribie, Econit's
\npresident Rizal Ramli.<\/p>\n
Usman said ALatief Corp was asked by Freeport to cooperate in
\nmanaging its noncore business assets in Irian Jaya in 1985. But
\nthe negotiations between them did not bear fruit.<\/p>\n
Freeport approached ALatief Corp again in late 1990 and they
\nwere engaged in serious talks in early 1991, Usman said. During
\nthe negotiations, Freeport was represented by New York's law
\noffice Davis Polk and Associates while ALatief Corp was
\nrepresented by Makarim and Tairas.<\/p>\n
Usman said Freeport offered a cooperation with ALatief Corp
\ndue to the latter's good reputation in retail and management
\nbusiness.<\/p>\n
According to Usman, ALatief Corp bought Freeport's
\ninfrastructure assets for US$370 million, financed by $115
\nmillion of equity and $255 million of debt guaranteed by
\nFreeport.<\/p>\n
The assets include department stores, recreational facilities,
\na hotel, a golf course, schools, a hospital, housing, a port.<\/p>\n
Usman said ALatief Corp considered the business deal very
\nrisky due to the remote location of Freeport's mining field and
\nthe fact that ALatief Corp would only serve a single market.<\/p>\n
Banks were then only willing to give loans to ALatief Corp
\nafter Freeport acted as guarantor for the loans, Usman said.<\/p>\n
In the first years, Usman said, ALatief Corp could make a
\nprofit from the margin between a yearly after-tax return on
\nequity of 15 percent and the yearly 9 percent cost of funds.<\/p>\n
Since the middle of 1997, however, the investment become
\nunprofitable following the rise in the cost of funds to between
\n15 percent and 20 percent.<\/p>\n
\"Nevertheless, we shall fulfill our commitment to the project.
\nWe shall not back away from it despite the difficult times,\"
\nUsman said. (jsk)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/latief-defends-business-accords-with-freeport-1447893297",
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