Wed, 09 Mar 2005
From: Jawawa

Corruption at Pertamina looms over fuel price hikes

Vincent Lingga, The Jakarta Post, Jakarta

So what! That may be the skeptical reaction of most people to the ruling by the Business Competition Supervisory Commission that state oil and gas company Pertamina and three of its business partners conspired to rig the tender for the sale of two very large crude carriers in mid-2004.

After all, many previous rulings in high-profile cases have been overturned in appellate courts on technicalities or procedural faults, despite the painstaking work of the antitrust body to build its rulings based on well-documented evidence.

The commission's ruling on the tanker sale also seems to have been based on well-documented evidence, capping almost eight months of poring over 291 documents and questioning 26 witnesses.

The conclusion, announced last week, simply validated the allegations by the Pertamina union and several anticorruption activists, who last year campaigned to block the tanker sale but succeeded only in creating a nationwide controversy and headline stories for a few days.

The evidence pieced together by the commission showed that Pertamina and three other companies -- Frontline Ltd., Goldman Sachs and PT Equinox shipping company -- conspired to rig the tender in the favor of Frontline, causing between US$20 million and $56 million in state losses.

The commission concluded that they violated Article 19 of the antimonopoly law prohibiting businesspeople from discriminating against other business players, and Article 22 banning businesspeople from conspiring to determine the winner of a tender.

Some of the evidence pieced together by the commission:

* Pertamina selected Goldman Sachs as the financial adviser and arranger of the tender without a beauty contest (competitive bid), in violation of government regulations.

* Frontline, which eventually won the tender, was allowed to submit a bid, through PT Equinox, as its Indonesian agent, after the deadline for bids had passed.

* The opening of Frontline's bid was not witnessed by a notary public, as Goldman Sachs required for the two earlier bidders.

As early as last September, after 30 days of preliminary investigation into the controversial tanker sale, the commission found strong indications of unfair competition in determining the winning bidder, and duly notified Pertamina and related parties of the findings.

However, Pertamina went ahead with the tanker sale, saying it faced severe cash flow problems, the tender was fair and transparent and Frontline was declared the winner because the other two bidders could not put up a 20 percent down payment and US$5 million surety bond for each of the two tankers.

The commission's findings only strengthened the public's suspicion about deep-rooted gross inefficiency and corruption at the state oil monopoly. And these findings certainly insulted the public's sense of justice, particularly as people now strain under the burden of the recent fuel price increases.

Rent-seekers seem to have re-entered Pertamina, especially after former Caltex Pacific Indonesia CEO Baihaki Hakim, who was appointed in February 2000 by then president Abdurrahman Wahid to clean up the state company, was replaced in September 2003.

It was Hakim who decided to order the two very large tankers in late 2002 from South Korea, in a bid to eliminate the mafia- style business practices that had cost the company hundreds of millions of dollars in tanker charges, as confirmed by PriceWaterhouseCoopers in a special audit in 1999.

Remember the controversial sale by tender of PT Indomobil, Indonesia's second largest automobile group, by the Indonesian Bank Restructuring Agency (IBRA) in late 2001?

The antitrust body, after three months of examining 170 documents and questioning dozens of witnesses, ruled in April 2002 that the three final bidders -- PT Bhakti Asset Management, PT Alpha Securitas Indonesia and PT Cipta Sarana Duta Perkasa -- had conspired to ensure Cipta Sarana won the bid.

The ruling, also built on well-documented evidence, stated that Cipta Sarana, an unknown company set up only in December 1998, did not qualify for the tender.

Similar to the Pertamina case, the commission discovered many circumstances and occurrences that raised disturbing questions about the integrity of the tender process.

However, all of the commission's rulings in the Indomobil case were overturned by appellate courts.

The commission also lost the case against Garuda's ticket reservation system and against the Jakarta International Container Terminal's alleged monopoly at the Tanjung Priok Port in Jakarta.

Many legal experts have questioned the technical competence of judges in the appellate courts (district courts and the Supreme Court) in dealing with complex business transactions.

But the commission suspects corruption in the district courts is one of the main reasons it lost these cases. In July 2002, the commission, frustrated by its many defeats in the district courts, demanded an audit of the assets of those judges who overturned its rulings. But again nothing happened.

Will the same thing happen to the commission's ruling on the tender for the tankers?

The answer could be yes, given the snail's pace of reform in the judicial system.

The situation is, however, not entirely hopeless. The March 1 fuel price increases have angered so many politicians, student leaders and activists that the government may have to act strongly on the commission's findings, otherwise public opposition to the new fuel policy will become much stronger and the government's credibility in fighting corruption will be eroded.

The writer is a senior editor at The Jakarta Post.





News Search/Filter
Transaction Rates
18 Nov 18
Buy
Sell
AED1
3,977.85
3,977.85
AFN1
193.47
193.47
ALL1
134.02
134.02
AMD1
30.36
30.36
ANG1
8,297.83
8,297.83
AOA1
47.08
47.08
ARS1
408.63
408.63
AUD1
10,718.84
10,718.84
AWG1
8,115.14
8,115.14
AZN1
8,582.29
8,582.29
BAM1
8,531.97
8,531.97
BBD1
7,305.68
7,305.68
BDT1
175.79
175.79
BGN1
8,531.81
8,531.81
BHD1
39,070.41
39,070.41
BIF1
8.26
8.26
BMD1
14,611.36
14,611.36
BND1
10,700.25
10,700.25
BOB1
2,131.43
2,131.43
BRL1
3,903.12
3,903.12
BSD1
14,611.36
14,611.36
BTC1
80,826,140
80,826,140
BTN1
204.87
204.87
BWP1
1,378.53
1,378.53
BYN1
6,971.21
6,971.21
BZD1
7,306.94
7,306.94
CAD1
11,113.39
11,113.39
CDF1
8.96
8.96
CHF1
14,621.81
14,621.81
CLF1
624,951.24
624,951.24
CLP1
21.82
21.82
CNH1
2,111.35
2,111.35
CNY1
2,105.99
2,105.99
COP1
4.61
4.61
CRC1
24.26
24.26
CUC1
14,611.36
14,611.36
CUP1
567.43
567.43
CVE1
150.18
150.18
CZK1
641.94
641.94
DJF1
82.07
82.07
DKK1
2,235.97
2,235.97
DOP1
293.22
293.22
DZD1
123.66
123.66
EGP1
822.34
822.34
ERN1
974.26
974.26
ETB1
527.54
527.54
EUR1
16,683.44
16,683.44
FJD1
6,934.35
6,934.35
FKP1
18,760.89
18,760.89
GBP1
18,760.89
18,760.89
GEL1
5,971.15
5,971.15
GGP1
18,760.89
18,760.89
GHS1
3,054.08
3,054.08
GIP1
18,760.89
18,760.89
GMD1
294.55
294.55
GNF1
1.62
1.62
GTQ1
1,909.06
1,909.06
GYD1
70.42
70.42
HKD1
1,866.23
1,866.23
HNL1
608.80
608.80
HRK1
2,245.93
2,245.93
HTG1
203.14
203.14
HUF1
51.86
51.86
IDR1
1.00
1.00
ILS1
3,944.21
3,944.21
IMP1
18,760.89
18,760.89
INR1
202.98
202.98
IQD1
12.34
12.34
IRR1
0.34
0.34
ISK1
119.14
119.14
JEP1
18,760.89
18,760.89
JMD1
116.95
116.95
JOD1
20,593.76
20,593.76
JPY1
129.50
129.50
KES1
142.98
142.98
KGS1
212.66
212.66
KHR1
3.64
3.64
KMF1
33.85
33.85
KPW1
16.23
16.23
KRW1
13.02
13.02
KWD1
48,396.08
48,396.08
KYD1
17,673.16
17,673.16
KZT1
39.84
39.84
LAK1
1.72
1.72
LBP1
9.73
9.73
LKR1
83.33
83.33
LRD1
92.40
92.40
LSL1
1,035.81
1,035.81
LYD1
10,551.98
10,551.98
MAD1
1,541.67
1,541.67
MDL1
857.46
857.46
MGA1
4.05
4.05
MKD1
271.16
271.16
MMK1
9.19
9.19
MNT1
5.86
5.86
MOP1
1,825.73
1,825.73
MRO1
40.92
40.92
MRU1
398.89
398.89
MUR1
420.71
420.71
MVR1
945.10
945.10
MWK1
20.18
20.18
MXN1
724.73
724.73
MYR1
3,489.04
3,489.04
MZN1
241.73
241.73
NAD1
1,035.81
1,035.81
NGN1
40.08
40.08
NIO1
455.43
455.43
NOK1
1,731.44
1,731.44
NPR1
128.04
128.04
NZD1
10,047.35
10,047.35
OMR1
37,957.59
37,957.59
PAB1
14,611.36
14,611.36
PEN1
4,354.25
4,354.25
PGK1
4,371.46
4,371.46
PHP1
277.93
277.93
PKR1
109.55
109.55
PLN1
3,866.10
3,866.10
PYG1
2.48
2.48
QAR1
4,044.49
4,044.49
RON1
3,575.56
3,575.56
RSD1
141.09
141.09
RUB1
221.43
221.43
RWF1
16.56
16.56
SAR1
3,894.33
3,894.33
SBD1
1,825.38
1,825.38
SCR1
1,068.98
1,068.98
SDG1
309.34
309.34
SEK1
1,622.37
1,622.37
SGD1
10,647.36
10,647.36
SHP1
18,760.89
18,760.89
SLL1
1.74
1.74
SOS1
25.46
25.46
SRD1
1,959.15
1,959.15
SSP1
112.16
112.16
STD1
0.69
0.69
STN1
674.88
674.88
SVC1
1,683.14
1,683.14
SYP1
28.37
28.37
SZL1
1,035.81
1,035.81
THB1
444.85
444.85
TJS1
1,563.04
1,563.04
TMT1
4,162.80
4,162.80
TND1
5,054.06
5,054.06
TOP1
6,377.60
6,377.60
TRY1
2,740.36
2,740.36
TTD1
2,185.19
2,185.19
TWD1
476.56
476.56
TZS1
6.37
6.37
UAH1
530.57
530.57
UGX1
3.94
3.94
USD1
14,611.36
14,611.36
UYU1
449.79
449.79
UZS1
1.77
1.77
VEF1
0.05
0.05
VND1
0.63
0.63
VUV1
132.60
132.60
WST1
5,594.99
5,594.99
XAF1
25.43
25.43
XAG1
210,513.09
210,513.09
XAU1
17,844,846.11
17,844,846.11
XCD1
5,406.10
5,406.10
XDR1
20,297.81
20,297.81
XOF1
25.43
25.43
XPD1
17,195,499.69
17,195,499.69
XPF1
139.80
139.80
XPT1
12,368,358.23
12,368,358.23
YER1
58.36
58.36
ZAR1
1,041.95
1,041.95
ZMW1
1,243.42
1,243.42
ZWL1
45.32
45.32
Taxation Exchange Rates
31 Aug 16 - 06 Sep 16
USD 1
13,232.00
AUD 1
10,043.30
CAD 1
10,213.70
DKK 1
1,999.40
HKD 1
1,706.22
MYR 1
3,283.28
NZD 1
9,623.63
NOK 1
1,605.23
GBP 1
17,433.70
SGD 1
9,757.68
SEK 1
1,569.45
CHF 1
13,631.10
JPY 100
13,101.00
MMK 1
11.01
INR 1
197.29
KWD 1
43,920.70
PKR 1
126.23
PHP 1
285.00
SAR 1
3,528.53
LKR 1
91.12
THB 1
382.08
BND 1
9,756.53
EUR 1
14,885.50
CNY 1
1,987.61

Okusi Associates: Indonesian Business & Management Services