Sat, 05 Mar 2005

Sugiharto talks tough to Pertamina

Urip Hudiono and Febiola Desy Unidjaja, The Jakarta Post/Jakarta

The government will not hesitate to prosecute any Pertamina officials suspected of wrongdoing in the sale of two tankers belonging to the state oil and gas company, a minister says.

The Business Competition Supervisory Commission (KPPU) recently issued a report saying there was evidence these sales were fraudulent.

State Minister of State Enterprises Sugiharto said any officials found to engaged in illegal behavior would be fired and prosecuted.

"I will look into the KPPU's report of the case, and take necessary actions as soon as possible," Sugiharto said on Friday.

Sugiharto said he would also take into account the agency's recommendations of immediately suspend the activities of Pertamina's director of finance Alfred Rohimone who played a dominant role in the sales process.

"Yes, that will certainly be among the measures to be taken," he said.

"If we have collected enough evidence, then we should submit it to the police and prosecutors, so that the case can be brought to court," he said.

He, however, refused to say when exactly he would replace the officials or file the case to court.

The KPPU ruled on Thursday that Pertamina and three of its business partners were guilty of colluding in the sale of two of the company's VLCC (very large crude carrier) tankers worth US$184 million last year.

As the market price of each of the tankers was between $120 million and US$150 million, the sales had caused the state to lose at least $50 million.

The KPPU recommended the three partners -- Singapore-based financial advisor Goldman Sachs, Indonesian shipping firm PT Equinox, and the tender winner, Bermuda-based shipping firm Frontline Ltd -- to pay $61.27 billion in fines to the state and Rp 180 billion ($19.4 million) in penalties.

The commission also ordered Pertamina's board of directors and board of commissioners to report their wrongdoings to a shareholders meeting, and forbade the company to do business with the three partners until they had complied with the legally binding decision.

In a related development, Pertamina's board of commissioners sought a clarification from Alfred, who was said to have played a key role in the tanker sales.

President Commissioner Martiono Hadianto said after the board's meeting with Alfred that they were collecting information for the coming shareholders meeting.

"This was not an interrogation, but we need to get more information from the director before we can hold the shareholders meeting," he said.

The board of commissioners had the power to suspend the board of directors, but any decision had to be approved at a shareholders meeting.

"We have the authority to suspend the director but we have to have valid reasons to do so. That is why we will have another meeting next week," he said.

Martiono promised they would abide with the KPPU's decision to hold a shareholders meeting within a month, to decide whether they would take legal action should Alfred be found guilty.

Alfred left the meeting after three hours of clarification. He would make no comment.

Meanwhile, Goldman Sachs said that KPPU's ruling was baseless and inconsistent with the facts of the tanker sales.

"We are sure that we have conducted the sales in a rightful manner and in accordance with international standards," the company said.

Similarly, Frontline said in a statement that would take all steps to challenge the ruling and have it overturned.

"Frontline absolutely rejects allegations that their conduct in the transaction was anything but proper and professional," the company said, arguing that the sales were based on fair market terms of an open auction.





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