Bakrie denies any wrongdoing in Freeport deal
JAKARTA (JP): Chairman of PT Bakrie & Brothers Aburizal Bakrie denied on Thursday that he had acquired a lucrative stake in copper and gold mining company PT Freeport Indonesia through his political connections.
Aburizal said Bakrie's affiliate Indocopper Investment Corporation (IIC) acquired a 10 percent stake in Freeport Indonesia, a subsidiary of the U.S.-based Freeport McMoRan Gold and Copper Inc., "in line with existing procedures" in 1991.
He said IIC bought the shares, which were offered to the Indonesian people by Freeport McMoRan, in compliance with the terms of its renewed contract of works (COW) and after finding that neither the government nor state and private companies were interested in buying the shares.
"When PT Freeport Indonesia offered the shares, neither private national companies nor the government were interested (in buying them)," Aburizal said.
Aburizal was countering allegations made by Jeffrey A. Winters, an American professor who earlier this week said that Coordinating Minister for Economy, Finance and Industry Ginandjar Kartasasmita had colluded with Aburizal to help the latter acquire a stake in Freeport while he served as minister of mines and energy from 1988 to 1993.
Freeport Indonesia, which mines the world's largest gold and cooper reserves in Irian Jaya, was 90 percent owned by Freeport McMoRan and 10 percent owned by the Indonesian government until the government renewed its contract in December 1991.
The government then made McMoRan divest another 10 percent of its shares to the Indonesian people in exchange for renewal of the contract.
The Sept. 30 edition of the Asian Wall Street Journal reported that Bakrie had possibly acquired a stake in Freeport thanks to his connection with Ginandjar.
The newspaper said Bakrie paid $212.5 million for a 10 percent stake in Freeport Indonesia. The purchase was financed by a $173 million bank loan guaranteed by Freeport McMoRan.
The Journal then went on to say that Bakrie sold just under half of the stake back to Freeport one year later at roughly double the price per share. The transaction yielded a 500 percent profit on the initial investment of about $40 million.
Bakrie sold its remaining 5.1 percent share to PT Nusamba in 1996. Nusamba is controlled by former President Soeharto's crony Mohammad (Bob) Hassan.
Winters' allegations have upset Ginandjar, who has denied any wrongdoing.
President B.J. Habibie has ordered the Attorney General to charge Winters with defaming the Indonesian government.
Winters, a professor of political economy at Northwestern University in Chicago, has already returned home. He was quoted by Antara on Thursday as saying he would not withdraw his allegations.
"I didn't explicitly say Ginandjar was implicated in corruption. Anyway, I will not withdraw what I have said. My allegations are based on the reports of Econit (a local firm of consultants)," Winters said.
Freeport Indonesia said on Thursday that it had no comment to make on Winters' statement.
"Winters has already gone on record stating that Winters was only repeating what Winters has read in reports written by others and did not know the details," Freeport said in a statement.
In a related development, Tadjuddin Noor Said, a former legislator who was in charge of the House of Representatives' committee which reviewed Freeport Indonesia's contract of works, told The Jakarta Post that Freeport's contract was reviewed according to the correct procedures.
He said the House supported requiring McMoRan to divest a further 10 percent of its shares in Freeport Indonesia to the people of this country.
"Unfortunately, neither the government nor state and private enterprises were interested. Thus, when Bakrie came to take the shares, we thought him some kind of a savior," Tadjuddin said. (jsk)