Bid loser wins tankers tender

Bid loser wins tankers tender

Fitri Wulandari, The Jakarta Post, Jakarta

The Pertamina tanker scandal became murkier on Monday when a
document surfaced indicating the state company was in the process
of selling two supertankers to a company that did not win the
tender process.

The document, which was obtained by The Jakarta Post, showed
that Bermuda-based Frontline Ltd., to whom Pertamina is selling
the tankers, finished second in a tender conducted by
international consultant Goldman Sachs. The top bidder, according
to the document, was Essar Shipping Ltd., a unit of the Indonian
Essar Group based in Mumbai.

"The evaluation by Goldman Sachs of the bid proposals
shorlisted three firms, which, based on highest weighting, are as
follows: Essar Shipping Limited, Frontline Ltd. and Overseas
Shipholding Group Inc.," the document said.

Otto Geo Diwara, chairman of Pertamina's union, confirmed the
contents of the document.

"Our investigation suggests that Frontline is not the real
winner. This is a case of high-level corruption and collusion,"
Otto told the Post on Monday.

A source said Essar offered a bid price of US$188 million for
the two Very Large Crude Carriers (VLCCs), higher than the $184
million bid by Frontline.

The sale of the tankers to Frontline is in progress and the
company has made a down payment on the tankers, which are being
built by Hyundai Heavy Industries in South Korea.

Despite the document, Pertamina president director Ariffi
Nawawi insisted on Monday that Frontline won the bid, not Essar.

"Frontline is the top bidder. There is no other company,"
Ariffi said after being questioned by the government-sanctioned
Corruption Elimination Commission (KPK).

He refused to provide details of the tender process.

Otto alleged that the sale of the two giant tankers was not
transparent from the beginning, saying Pertamina had directly
appointed Goldman Sachs as the consultant on the tender, rather
than selecting a consultant through a bidding process.

He also pointed to the possibility of collusion in choosing
Frontline as the winner of the tender, saying Goldman Sachs is a
shareholder in the shipping company.

Frontline says on its website that its shareholders include
Goldman Sachs Intern Equity Nontreaty Cus and Goldman, which have
a 0.95 percent (698,211 shares) and 0.92 percent (679,572 shares)
share in the firm respectively.

"It is a conflict of interest. Goldman is a consultant to the
bid but also has shares in the winner of the bid," Otto said.

On Monday, the KPK summoned Pertamina's Ariffi Nawawi and the
head of the tanker divestment team, Andri Hidayat, to clarify the
tanker sale.

After the questioning, Erry Riyana Hardjapamekas, KPK's deputy
chairman, said the commission had yet to find any indications of
corruption or collusion in the sale, but added the KPK would
summon members of Pertamina's former management team to get more
information.

Elsewhere, Erry said the KPK had thus far found no evidence
indicating Pertamina paid for a recent trip to South Korea and
Hong Kong by members of House of Representatives Commission VIII
for energy and mining affairs, despite a leaked memo suggesting
Pertamina footed the bill.

"The memo was from the (Pertamina) shipping general manager to
a travel agency, which turned out to be a Pertamina subsidiary.
But Pertamina did not pay for the trip," Erry said.