Frontline appeals against KPPU ruling
Frontline appeals against KPPU ruling
Leony Aurora, The Jakarta Post, Jakarta
Seeking to clear its name from accusations of collusion
accusation, the winner of a tender to purchase Pertamina tankers,
Frontline Ltd., has filed an appeal against the recent ruling by
the Business Competition Supervisory Commission (KPPU).
The Bermuda-based shipping company had followed all proper
tender procedures, Anthony Hutapea from the Hotman Paris and
Partners law firm, which is representing Frontline, told The
Jakarta Post on Monday after submitting the file to the Central
Jakarta District Court.
"We reject being accused of breaking Law No. 5/1999 (on
monopolies and unfair competition) and colluding with Pertamina
and Goldman Sachs," said Anthony, referring to the state oil and
gas firm and the financial advisor for the tanker deal.
The KPPU ruled last month that the sale of two Pertamina Very
Large Crude Carriers (VLCC) in 2004 was riddled with
irregularities.
On June 2, 2004, Goldman presented to Pertamina three
shortlisted-candidates from the round second bid: Essar Shipping
Ltd, Frontline Shipping Ltd and Overseas Shipholding Group (OSG).
Essar was declared the highest bidder at US$183.5 million.
Frontline, through its agent PT Equinox, raised its bid to
$184 million from $178 million in the third round of bidding and
was declared the winner.
Anthony said in ranking the bidders, the tender accorded
pricing 80 percent of the score, payment terms 10 percent, proof
of financing 5 percent and bidder reputation 5 percent.
"Even though Essar had made a higher bid earlier, it scored
only 95 percent while Frontline scored 98 percent," he said.
Essar scored lower as it could not pay the 20 percent advance
payment required by Pertamina, said Anthony. The India-based
shipping firm also was rated below Frontline in terms of
reputation and proof of financing.
Goldman late last month also filed a similar appeal to defend
its role in the tanker sale.
In its ruling, the KPPU ordered the Pertamina's boards of
directors and commissioners to explain the case to its
shareholders. Goldman Sachs, Frontline and Equinox, meanwhile,
have been ordered to pay Rp 19.7 billion ($2.04 million), Rp 25
billion and Rp 16.6 billion in fines respectively.
Goldman and Frontline were also ordered to pay extra sums to
the government -- Rp 60 billion and Rp 120 billion, respectively
-- so as to make up for lost potential revenue.
Reports have claimed that the price for the two tankers should
have been over $200 million, well above the price paid by
Frontline.
Anthony said that Frontline would not seek an apology from the
KPPU or damages should its appeal be upheld.