Graft charges could derail Telkom-Ariawest deal
Debbie A. Lubis, The Jakarta Post, Jakarta
Corruption allegations against a top official of PT Ariawest International, a former partner of the state-owned telecommunications company PT Telkom, to develop and operate fixed telephone lines in West Java, could delay an expected deal between the two firms in resolving a long-running dispute, a lawyer said.
"I strongly believe this investigation suggests a desire to seek publicity for other motives, one of which may possibly be an attempt to frustrate the ongoing settlement negotiations between the parties," Ariawest lawyer Todung Mulya Lubis said on Friday at a media conference.
Reports earlier said that the Bandung prosecutor's office in West Java had declared president of Ariawest International John G. Voundras and another official Michael Lee Towne, suspects in a Rp 74 billion (US$7.79 million) corruption case.
The case was filed by Telkom West Java and the Banten branch of the workers' union.
For over a year, Telkom and Ariawest, which is 35 percent owned by U.S.-based telecommunications firm AT&T, have been trying to reach a solution over the troubled West Java telecommunications project.
The dispute has put pressure on Telkom shares in the stock market.
But earlier this month Telkom said it hoped to strike a deal soon to buy out the AriaWest West Java assets for around $300 million as compensation for terminating the Ariawest contract to operate fixed lines in the province.
"Actually the agreement may be signed in the fourth week of April because in principal, some agreements have been concluded by Telkom and AriaWest. But this allegation has become the greatest hurdle for the settlement," Todung said.
The alleged corruption case centers on the transfer of some Rp 74 billion in funds by the two Ariawest senior officials to the company's bank account at Chase Manhattan Bank Jakarta branch to cover expatriate and training costs from 1996 to 1999.
According to the charges, the fund transfer was considered as corrupt because it was executed without any receipts or other explanatory notes.
But Todung said that the allegation was baseless.
"The corruption allegation is baseless since there was no evidence. We have the audited financial report and joint operation agreement. All expenses are justified," he said.
Todung also said that the prosecutor's office had generated defamatory and insulting media reports and had carried out an unfair investigation since his client had not been summoned through any proper legal procedure.
He added that his law firm had sent a letter to the Attorney General's Office to protest the improper action taken by the prosecutor's office.
"For the sake of Indonesia's future development and ability to attract much-needed foreign investment, we trust your office will bring this matter under control," the letter said, a copy of which was seen by this paper.
He also said that the Telkom board of directors did not support the corruption charges made by the company's West Java and Banten workers' union branches.
Meanwhile, Telkom investor relations manager Setiawan Sulistyono said that negotiations with Ariawest were expected to be completed soon, and hoped that they would not be derailed by the corruption allegation issue.
Telkom shares were down to Rp 4,175 on Friday on the Jakarta Stock Exchange, from Rp 4,225 on Thursday.