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.