American citizen charged in Karaha Bodas graft scandal

American citizen charged in Karaha Bodas graft scandal

P.C. Naommy, Jakarta

Police have declared an American citizen a suspect in the Karaha
Bodas geothermal scandal, bringing the number of the suspects to
three.

The police charged Robert McKutchen, the vice president of
Karaha Bodas Co. (KBC), along with two other suspects, Priyanto,
a former head of the geothermal division at state-owned oil
company Pertamina, and a member of his staff, Syafei Sulaiman,
for their roles in the alleged graft case.

The charges followed the questioning of 24 people from the two
companies, National Police chief of detectives Comr. Gen. Suyitno
Landung Soedjono said on Saturday.

He said all the three suspects were held responsible for "fake
transactions" and a mark-up deal worth US$19 million, without
providing details.

National Police spokesman Insp. Gen. Paiman said McKutchen may
have returned home to his country, but added that his office had
sent summonses for the two other suspects from Pertamina for
questioning later this week.

The government has asked the police to investigate possible
corruption in the process of awarding the contract by Pertamina
after the United States court ordered Pertamina to pay Karaha
Bodas more than $290 million in compensation for the cancellation
of the project.

KBC's geothermal power project in Garut, West Java was
canceled by the government in the wake of the economic crisis in
1998, while the contract was awarded to the firm by Pertamina in
1994.

In order to get its investment back and seek compensation for
its potential losses, the KBC filed a lawsuit against Pertamina
with the Geneva Arbitration Court in 2000, which ruled in favor
of KBC.

KBC later asked the U.S. to affirm the arbitration decision.
The move led to several years of court battles between Pertamina
and the KBC in the U.S. courts, which ended recently with a
ruling from the U.S. appeals court ordering Pertamina to pay KBC
about $290 in compensation.

Pertamina has decided not to appeal the ruling and agreed to
pay the compensation. However, it is still unclear whether the
compensation will be paid by the government or Pertamina.

At the order of the U.S. court, several banks in the U.S. have
frozen more than $500 million in deposits owned by the Indonesian
government and Pertamina.

A senior official of Pertamina recently said Indonesia would
pay compensation to KBC in accordance with the court's order but
the government would investigate any possible corruption in the
awarding of the contract to KBC and the development of the
project.