Goldman defends role in sale of Pertamina tankers

Goldman defends role in sale of Pertamina tankers

Fabiola Desy Unidjaja, The Jakarta Post, Jakarta

Defending its role in the sale of two Pertamina tankers, global
investment firm Goldman Sachs is planning to file an objection
against the recent ruling by the Business Competition Supervisory
Commission (KPPU) in court on March 24.

The KPPU ruled that Goldman Sachs, the financial advisor to
Pertamina in the sale process, was guilty of colluding with the
state oil and gas firm, eventual tender winner Frontline Ltd. and
its agent, Indonesian shipping firm PT Equinox -- which led to
potential losses in state revenue.

KPPU made its ruling based on suspected irregularities in
awarding Frontline the deal, while another bidder, India-based
Essar, had offered the tankers at a higher price than that of
Frontline's.

However, Arief Sidarto, Goldman Southeast Asia's chief
operating officer, defended the firm's role, saying no
regulations were broken while awarding the contract to the
Bermuda-based shipping company.

Moreover, he added, Essar was not able to fully comply with
requirements set by Pertamina.

"Essar initially offered the highest bid, but failed to
fulfill the requirement of paying a 20 percent down payment upon
the signing of the sales and purchase agreement.

"That's why we accepted the bid from Frontline," Arief said.

Indian-based Essar bid US$183.5 million for the tankers --
called the Very Large Crude Carrier (VLCC). Frontline's bid was
$178 million. The other shortlisted bidder was OSG, which offered
$169million.

Local media reports have claimed that the value of the two
tankers should have been well over $200 million.

Arief, who handled the tender from the beginning, added that
Essar had said that they could not fulfill the 20 percent
advanced payment demand, even after the deadline had been
extended for two days.

During that the extension period, Frontline came in with a
third bid, which exceeded Essar's offer, while also agreeing to
comply with the advanced payment requirement.

Frontline was eventually declared the winner with $184
million.

Earlier, the KPPU's Pande Raja Silalahi said that the
commission was ready to defend its ruling in court.

KPPU ordered Pertamina's board of directors and commissioners
to explain the case to its shareholders, and ordered Goldman
Sachs, Frontline and Equinox to pay Rp 19.7 billion (about
US$2.04 million), Rp 25 billion and Rp 16.6 billion in fines,
respectively.

Goldman and Frontline, which also denied any wrongdoing, were
also ordered to pay an extra amount to the government -- Rp 60
billion and Rp 120 billion, respectively -- ostensibly to recoup
lost potential revenue.