Govt to appoint auditor to review Guthrie deal
JAKARTA (JP): The government said on Wednesday it would appoint an independent auditor to review the controversial US$350 million deal to sell oil palm plantations to Malaysia's Kumpulan Guthrie Bhd.
Finance minister Prijadi Praptosuhardjo said that although the government had concluded the deal with Guthrie, a review remained necessary.
"To call the deal off wouldn't be ethical, so what's left is to see whether the transaction is fair," Prijadi told reporters on the sidelines of the two-day G-15 summit at the Jakarta Convention Center.
He said the government would report the audit result to the Indonesian Bank Restructuring Agency's (IBRA) oversight committee. However, Prijadi fell short of explaining what the audit will cover.
In November last year, IBRA sold Guthrie 24 oil palm plantations -- formerly owned by the Salim Group -- covering 260,000 hectares in Sumatra, Kalimantan and Sulawesi.
IBRA took over Salim's plantation assets as collateral for loans the group received from local banks that were nationalized during the economic crisis.
"We'll ask for their (oversight committee's) opinion on whether there is something wrong with the deal," Prijadi went on.
The oversight committee, chaired by former finance minister Mar'ie Mohammad, was formed last year to supervise IBRA's decisions and provide the agency with recommendations.
However, the committee has no power to annul IBRA's decisions.
Controversy over the Guthrie deal arose last year when legislators questioned the status of the land covering the oil palm plantation area in Riau.
The legislators also criticized IBRA for having neglected the social and political impact the deal could have on Riau. They are demanding the government review or even cancel the deal.
The Riau plantations were partly developed in cooperation with local farmers under a nucleus farming scheme, which allows the farmers, after certain years, to own part of the plantation.
Guthrie has promised the cooperation scheme applied by the former owner with the farmers would continue despite the change in management.
Vice President Megawati Soekarnoputri reportedly threw her weight behind the legislators, saying the deal should be reviewed.
"The issue concerning Guthrie comes down to two matters, first the transaction, and second how to attend to the local farmers' need," Prijadi explained. He added that another issue was to negotiate with the farmers on the community projects Guthrie could offer.
Nonetheless, Guthrie's Group chief executive Abdul Khalid Ibrahim last month dismissed the worries which the upcoming audit might stir.
According to him, the review is being conducted to ensure the sale is done properly. "It is good for Indonesia and it's good for Guthrie...The review doesn't mean anything to the arrangement (deal)," he said.
Khalid added his company had already assumed management control of the Indonesian plantation companies since March 31. (bkm)