Court overturns KPPU tanker sale ruling
Leony Aurora, The Jakarta Post, Jakarta
The Central Jakarta District Court overturned a ruling of the Business Competition Supervisory Commission (KPPU) over state oil firm PT Pertamina's tanker sale, saying it found no elements of unhealthy competition in the deal.
Responding to the verdict favoring the plaintiffs -- Pertamina, the deal's financial advisor Goldman Sachs Pte., tender winner Frontline Shipping Ltd. and its local agent PT Equinox -- KPPU's lawyers said that they would appeal to the Supreme Court within 14 days.
The panel of judges said on Wednesday that Frontline, which offered US$178 million for the two Very Large Crude Carriers (VLCCs), scored higher than its competitor Essar Shipping Ltd., despite the latter's $183 million bid.
"Essar could not provide a 20 percent down payment on time, as was shown by a letter from its guarantor the State Bank of India," said the judge.
Bermuda-based Frontline later raised its bid through Equinox to $183.5 million and was announced as tender winner.
The court opined that due to the limited time -- Pertamina was concerned that the assets could be seized at any time as a result of its dispute with Karaha Bodas Company (KBC) -- Goldman Sachs did not have to ask for a third bid from the other shortlisted candidates, Essar and Overseas Shipholding Group (OSG).
"Essar could not fulfill the requirements and OSG had always bid lower than the others in the earlier biddings," the court said.
It further said that the state did not suffer losses from the sale as Pertamina built the two tankers for $130.8 million, despite reports that the tankers were worth well over $200 million.
KPPU's lawyer David Tobing stuck to the view that the deal was riddled with irregularities.
"The tender winner was announced on June 10 (last year)," he said. Pertamina meanwhile obtained an approval for the VLCC sale from the State Minister of State Enterprises, which represented the government as the shareholder, only on June 11, he added.
"Pertamina sent a letter to the Minister of Finance in July requesting an approval for the tanker plan," said Tobing, showing a copy of the letter.
"The deal was closed a month before (the letter), but the procedures for approval were conducted afterwards."
Amir Syamsuddin, one of the plaintiffs' lawyers, said that the case reflected KPPU's lack of understanding of business competition.
The court's decision annulled the financial and legal consequences of KPPU's ruling, which was issued in early March.
At the time, KPPU ordered Pertamina's board of directors and commissioners to explain the case to its shareholders. Goldman Sachs, Frontline and Equinox were required to pay Rp 19.7 billion ($2.08 million), Rp 25 billion and Rp 16.6 billion in fines, respectively.
Goldman and Frontline were also ordered to pay Rp 60 billion and Rp 120 billion, respectively, to recoup lost potential revenue.
The district court also ordered the KPPU to pay court costs amounting to Rp 14.5 million.