Govt appeals to U.S. Supreme Court in KBC case
Govt appeals to U.S. Supreme Court in KBC case
The Jakarta Post, Jakarta
The government has filed an appeal with the U.S. Supreme Court to
seek the release of funds frozen in American banks, in another
twist in the legal saga between state oil and gas firm PT
Pertamina and U.S.-owned power firm Karaha Bodas Company (KBC).
Minister of Finance Yusuf Anwar said on Wednesday a team of
lawyers representing the government's interests in New York were
working to secure the release of some US$271 million frozen in
Bank of America and Bank of New York.
(In a report on Wednesday, we reported that $650 million was
frozen. However, according to a source familiar with the case
some $350 million was released in March of this year and another
$29 million was released to KBC in October).
"We have prepared, through our lawyers in New York, a notice
of appeal against the (previous) legal decision (by a U.S.
court)," Yusuf said.
The banks froze the funds after a U.S. court issued a decision
upholding an international arbitration ruling ordering Pertamina
to compensate KBC for the suspension of a geothermal power
project in Indonesia.
The government insists the funds are government revenue from
oil and gas exports so they do not belong to Pertamina.
KBC is among dozens of independent power producers whose power
projects here were suspended by the government in the wake of the
1997 Asian financial crisis. KBC, which signed a contract with
Pertamina on the project, filed a lawsuit with an international
arbitration court against Pertamina for breach of contract.
The Swiss-based arbitration court ruled in favor of KBC,
ordering Pertamina to pay the firm $261 million. A U.S. court
upheld the ruling and ordered Pertamina to pay $291 million in
compensation, including interest.
Pertamina has refused to pay the compensation, prompting KBC
to ask the U.S. courts to freeze Pertamina's funds in U.S. banks.
The government is now seeking an out-of-court settlement with
KBC and an end to this costly legal battle that has dragged on
for years.
Indonesia has also launched an investigation into alleged
markups in the KBC power project.
The Directorate General of Taxation has also accused three top
executives of KBC of failing to pay a total of Rp 12 billion in
taxes. One of the executives, identified by the initials LSP, was
placed in Cipinang penitentiary on Tuesday.
Hadi Purnomo, director general for taxation at the Ministry of
Finance, told The Jakarta Post on Wednesday his office would
confiscate the jailed executive's assets if he remained
uncooperative.
"If LSP does not want to pay the taxes in installments over
six months, then we will seize his assets to cover the bill. And
if his assets are insufficient, LSP will remain in detention for
two to six," Hadi said.
According to a guard at the penitentiary, LSP are the initials
of Loedito Setyawan Poerbowasi. The son-in-law of former
Indonesian vice president Sudharmono, he is one of the owners of
PT Sumarah Daya Sakti, which partnered with American firms
Caithness Energy and Florida Power & Light Co. to form KBC.
The other two executives, an American and Canadian, have not
been arrested.