Experts split over move on Soeharto businesses

Experts split over move on Soeharto businesses

JAKARTA (JP): Legal experts are divided over the legitimacy of
the government's sudden move to review the vast trail of business
contracts leading to former president Soeharto's family.

Lawyer Frans Hendra Winarta said the move was understandable
considering the strong demand for the new Habibie administration
to fight the rampant corruption, collusion and nepotism
bequeathed by the Soeharto regime.

But Frans said the government would find be hard pressed to
find a legal basis to nullify the contracts before they expired.

"Collusion and nepotism are certainly wrong in terms of
morality and ethics, but I am not sure if we already have laws
which outlaw them," Frans said, adding any reform movement should
be consistent with the law.

Lawyer Todung Mulya Lubis said in normal conditions contracts
signed by two parties could not be abrogated unless one party
breached them.

"But the current situation can be considered 'not normal'. The
public now strongly demands a clean government. Based on this
demand, I think contracts which were not made in fairness in the
past can be reviewed now."

Lubis qualified this by stating the government should protect
the interests of foreign investors who cooperated with Soeharto's
family.

"I think the government can offer them new business partners
with whom they can work more comfortably at present," Lubis said.

Minister of Mines and Energy Kuntoro Mangkusubroto earlier
said the government would review contracts between state oil and
gas company Pertamina and shipping companies and trading houses,
many of which are controlled by Soeharto's children.

The companies include Perta Oil Marketing Ltd, which is
controlled by Soeharto's youngest son Hutomo "Tommy" Mandala
Putra and others, and Permindo Trading Oil Co Ltd, which is
controlled by Bambang Trihatmodjo and associates.

Bambang is Soeharto's second eldest son.

Perta and Permindo have held the exclusive right to import
fuel and crude oil respectively for Pertamina for decades.

Kuntoro said contracts with Perta and Permindo would end next
month and the government would hold open bidding for the imports
of fuel and crude oil for Pertamina.

Tommy also conducts business with Pertamina in the shipment of
fuel, liquefied natural gas (LNG) and crude oil through its
publicly listed company Humpuss Intermoda Transportasi.

In its 1997 annual report, Humpuss said Pertamina chartered
nine tankers from its fleet to transport crude oil, plus another
three tankers to carry LNG to export markets. Some of the tankers
are co-owned by Japanese investors.

The charter period of the tankers ranges from 10 to 12 years
until between 2005 and 2009.

East Java provincial authorities have also announced they will
review all projects in the province which involve Soeharto's
children.

These include two refinery projects in Situbondo and
Probolinggo owned by Bambang and Soeharto's cousin Sudwikatmono
respectively, and the Umbulan drinking water project owned by
Tommy.

Also under review is the 1,220 Megawatt (MW) Paiton II coal-
fired power project, which is 15 percent owned by Bambang, 50
percent by Siemens of Germany and 35 percent by the publicly
listed Power Gen. of Britain. The US$2 billion project is
scheduled to come on stream next year. (jsk)