Govt to honor Freeport's contract
JAKARTA (JP): Minister of Mines and Energy Kuntoro Mangkusubroto reaffirmed on Tuesday that the government would honor the mining contract of work (COW) with copper and gold mining company PT Freeport Indonesia.
"We are honoring the contract," Kuntoro said after opening the 26th convention of the Indonesian Petroleum Association (IPA).
Several analysts and legislators are demanding that the government renegotiate Freeport's COW to give greater benefits to the state.
The issue has been fanned by the controversy surrounding alleged collusion and corruption in the renewal of Freeport's original contract in December 1991.
The issue was ignited recently by American scholar Jeffrey A. Winters, who accused Coordinating Minister of Economy, Finance and Industry Ginandjar Kartasasmita of collusive practices concerning Freeport while he was minister of mines and energy from 1988 to 1993.
Quoting research made by local research company Econit, Winters accused Ginandjar of helping Bakrie Group chairman Aburizal Bakrie to gain a 10 percent stake in Freeport. He also said the minister helped ALatief Corporation, owned by former manpower minister Abdul Latief, to acquire Freeport's infrastructure assets in its mining field in the Grasberg and Erstberg area in Irian Jaya.
An angry Ginandjar has accused Winters of defaming him.
On an order from President B.J. Habibie, police and the Attorney General's Office have questioned several individuals including Ginandjar, Econit president Rizal Ramli and Freeport Indonesia's president Adrianto Machribie.
Kuntoro said the contract could be renegotiated only if "Freeport is willing to do so".
He refused to specify whether the government would renegotiate the contract if the Attorney General's Office found irregularities in the renewal of Freeport's COW.
"It all depends on what the attorney general says. I'm not in a position to recommend any change to the contract."
Freeport Indonesia is 81.28 percent owned by giant U.S. mining company Freeport McMoRan Copper & Gold. The remaining shares are held by the Indonesian government and PT Indocopper Investama Corporation (IIC) with equal 9.36 percent stakes.
IIC, formerly owned by Bakrie, is now 50.48 percent owned by PT Nusamba Mineral Industri, with the remaining shares owned by Freeport McMoRan (49 percent) and the investing public (0.52 percent).
Aburizal stated on Tuesday that Ginandjar was not involved in his share transaction with Freeport.
"Ginandjar didn't have a role at all in the purchase deal," Aburizal said after being questioned by officials at the Attorney General's Office.
Bakrie recounted that he received a letter from the then director general of general mining, Kosim Gandataruna, giving IIC the go-ahead to buy the 10 percent stake in Freeport Indonesia.
The letter was supplied to the U.S Chemical Bank to obtain a US$173 million loan to finance the purchase. The loan guarantor was Freeport McMoRan.
Aburizal said information that Freeport would sell a 10 percent stake to Indonesian companies did not come from Ginandjar but was public knowledge.
"It was just a business opportunity. Those who moved quicker would get the best (deal)."
Meanwhile, Freeport McMoRan confirmed on Tuesday from its headquarters in New Orleans that the attorney general had asked company chairman James R. "Jim Bob" Moffett to undergo questioning.
The company was quoted by Dow Jones news wire as saying that Moffett was "more than happy to oblige" the request, but a date for the questioning had yet to be set.
Moffett has "offered to do anything necessary to get all the facts on the table and resolve the issues as quickly as possible", the company said. It added that it considered its COW a "firm, legal contract" that could be changed only through international arbitration. (jsk/byg)