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)