Govt court battle with Cemex looms
Govt court battle with Cemex looms
Rendi A. Witular, The Jakarta Post, Jakarta
The government has indicated it may continue its legal battle
against Mexican cement giant Cemex SA at the international
arbitration court, following a deadlock between both parties in
the negotiation for an out-of-court settlement.
Cemex had earlier agreed to the government's request for the
suspension of a lawsuit scheduled for Jan. 11 to pave the way for
settling the dispute out of court, with both parties agreeing not
to continue with any proceedings until Feb. 28.
"There is a possibility that we may continue with the
arbitration... There is currently a deadlock in the negotiations
for the settlement," said Roes Aryawidjaja, the head of the
government's negotiation team, on Tuesday.
Roes said the government would try to renegotiate with Cemex
over a possible extension to suspend the arbitration hearing and
allow the government to come up with better settlement options.
The Cemex dispute arose when the government failed to fulfill
its side of an investment deal signed in 1998. Under the deal,
Cemex was to acquire majority control in state cement producer PT
Semen Gresik, but its West Sumatra subsidiary PT Semen Padang
opposed the arrangement.
The subsidiary company, along with local politicians, were
against the plan, fearing foreign domination of the cement
industry.
Cemex countered by filing a lawsuit with the International
Center for the Settlement of Investment Disputes.
The government has been under pressure to resolve the dispute
quickly to help restore investor confidence and avoid paying huge
penalties of over US$500 million.
The government previously planned to sign a memorandum of
understanding with Cemex on Jan. 25 to end their four-year legal
dispute when the company agreed to the government's settlement
option. However, the signing was canceled at the last minute for
reasons that are still unclear.
Legislator Azam Azman Natawijana of the House of
Representatives' Commission VI for industry, trade and state
enterprises urged the government to proceed with the arbitration.
He argued that the out-of-court settlement options provided by
the government to Cemex contained several irregularities that
might cause losses to the state and benefit certain government
officials and former government officials.
"I suspect there are a number of irregularities in the out-of-
court settlement options. It is better for the government to
continue with the arbitration because our position is legally
strong," he said. He refused to go into details of the
irregularities.
According to the Democratic Party faction lawmaker, the
Commission plans to summon former Minister of Finance Bambang
Subiyanto, former State Minister of State Enterprises Tanri Abeng
and his deputy for privatization Herwidayatmo.
The three are considered responsible for drafting the
conditional sales and purchase agreement (CSPA) between the
government and Cemex in 1998 for the purchase of 25.53 percent of
the shares in publicly listed Semen Gresik.
"The deal contains loopholes which have caused state losses.
We want to know if the three have been involved in selling their
country's assets to foreigners for their own benefit," said Azam,
adding that the Commission would urge the government to disclose
the original CSPA documents to the public.