Former minister of finance questioned over Freeport deal

JAKARTA (JP): Prosecutors at the Attorney General's Office questioned on Tuesday former minister of finance J.B. Sumarlin as part of an investigation into alleged corruption in the 1991 extension of the mining contract of copper and gold producer PT Freeport Indonesia.

"I came here to make a statement regarding the process leading to the extension of PT Freeport Indonesia's contract," Sumarlin, who was minister of finance when Freeport extended its contract in 1991, was quoted by Antara as saying.

The Attorney General's Office has questioned several people to probe the accusations highlighted by American scholar Jeffrey A. Winters last month that corrupt motives influenced the renewal of Freeport's contract in 1991.

Winters said Coordinating Minister for Economy, Finance and Industry Ginandjar Kartasasmita, who was minister of mines and energy when the contract was extended, was implicated in the scandal.

Winters, quoting the results of a study by consultancy firm Econit, said Ginandjar helped his friend Aburizal Bakrie acquire a 10 percent stake in Freeport which was developing the world's largest gold and copper reserve in the Grasberg area in the country's easternmost province of Irian Jaya.

Freeport sold the 10 percent stake to Bakrie's company Indocopper Investama as part of a divestment program under its renewed contract.

Winters suspected that there was collusion between Bakrie and Ginandjar behind the deal. He questioned why the 10 percent stake was not offered to the government.

Ginandjar said the stake was first offered to the government but Sumarlin rejected the offer. He also accused Winters of defaming him.

"At the time, the government was not interested in the offer because it lacked funds as the state budget was focused on financing infrastructure and physical utilities," Sumarlin said after 90 minutes of questioning.

Freeport later offered the shares to the private sector, he added.

Bakrie sold Indocopper to PT Nusamba Minerals and Freeport Indonesia's main shareholder, the United States giant mining company Freeport McMoRan Copper & Gold.

Freeport Indonesia is currently 81.28 percent owned by Freeport McMoRan, 9.36 percent by the Indonesian government, 9.36 percent by PT Indocopper Investama Corporation. Indocopper is 50.48 percent owned by Nusamba Mineral Industries, 49 percent by Freeport McMoRan and 0.52 percent by members of the public. (jsk)