Habibie suspected of interference in corruption probe

Habibie suspected of interference in corruption probe

JAKARTA (JP): An anticorruption watchdog said that it
suspected President B.J. Habibie of intervening to suspend an
investigation into corruption at the Balongan refinery in order
to protect close associates.

The Indonesian Corruption Watch (ICW) said it had information
that the Attorney General's Office had reported the identities of
the people responsible for the corruption to the President.

ICW said that despite the fact that the report was submitted
four months ago, no legal action had been taken.

"Given that the Attorney General's Office has stopped
investigation of the case, is it Your Excellency's policy to stop
the investigation?" ICW president Teten Masduki asked in a letter
sent on Thursday to the President.

A copy of the letter was made available on Friday to The
Jakarta Post.

The Balongan refinery in Indramayu, West Java, was built from
1990 to 1995 by state oil and gas company Pertamina with a
consortium led by Foster Wheeler of Britain as the main
contractor. It has a processing capacity of 125,000 barrels per
day.

Legislators accused Pertamina of marking up the project costs
and installing substandard equipment at the refinery, which has
continually experienced operational troubles.

Pertamina built the refinery at a cost of US$2.45 billion, but
legislators said the real cost of such a project was only $1.6
billion.

Former attorney general Muhammad Ghalib, in a letter sent to
Habibie on May 21 this year, -- a copy of which was also made
available on Friday to the Post -- said the investigation made by
his office indicated former Pertamina president Faisal Abda'oe
and former Pertamina processing director Tabrani Ismail were
implicated in the corruption.

Faisal, a close associate of former president Soeharto, ended
his leadership of Pertamina last year after eight years of
service.

He currently serves as head of the government-sponsored task
force for the Natuna liquefied natural gas project, which in the
past was chaired by Habibie.

Ghalib also said former mines and energy ministers Subroto and
Ginandjar Kartasmista, who is currently Coordinating Minister of
Economy, Finance and Industry, as well as former Pertamina
president AR Ramly, should also be questioned over their
knowledge, or possible involvement in the case.

Ghalib said the idea for the project originated from former
British prime minister Margaret Thatcher during her 1998 visit to
Jakarta.

Thatcher offered a $60 million grant from the British
government for the project.

Then Pertamina president AR Ramly, as well as then minister of
mines and energy Subroto, as Pertamina's chief commissioner,
approved the project. They appointed Foster Wheeler as the
contractor, British Petroleum as the offtaker of the refinery
products and Japans's Mitsui as the financier.

Ginandjar who took over from Subroto in 1989 also approved the
project.

Pertamina formed a team of negotiators led by Tabrani,
assisted by an assessment team formed by then state minister of
research and technology Habibie.

The assessment team was led by an expert staff member from
Habibie's office identified by Ghalib by the initials KHO.

Pertamina's team negotiated with Foster Wheeler from 1989 to
April 1990 on the price of the project.

During the negotiations, Foster Wheeler set the value of the
project at $1.813 billion, but the Pertamina team valued the
project at $1.623 billion.

Ghalib said that during the negotiations Foster Wheeler was
always accompanied by Soeharto's son Sigit Hardjodjudanto and his
relatives Erry Oudang and Bing Cintamani.

Ghalib said Tabrani finally accepted the price set by Foster
Wheeler under pressure from Sigit and his friends.

"Erry Oudang, Sigit Hardjodjudanto and Bing Cintamani, who
were always present at the negotiation talks... told Tabrani
the price offered by the consortium had been reported to the
President and approved by him," Ghalib said in his letter, adding
that the value of the project had been marked up by $113 million.

Local press reports have said Sigit and his friends received a
commission from Foster Wheeler for their service.

Faisal awarded a contract for the project to Foster Wheeler
and partners on April 23, 1990. (jsk)