House committee to probe tanker sales

House committee to probe tanker sales

Leony Aurora, The Jakarta Post, Jakarta

One year has passed since the controversial sale of two Very
Large Crude Carriers (VLCCs) but state oil and gas firm PT
Pertamina is still feeling the repercussions, as the House of
Representatives formed a special committee on Tuesday to look
into the deal.

Comprising 28 members, the committee was officially
established during a House plenary session and will begin its
work immediately.

"The House has formed the committee to investigate indications
of legal violations and policy irregularities," said Agusman
Effendi, a committee member from the Golkar faction.

This move comes on the back of an ongoing legal battle between
Pertamina and its partners in the sale, and the Business
Competition Supervisory Commission (KPPU).

Included on the special House committee are six members from
the Golkar faction, five from the Indonesian Democratic Party of
Struggle (PDI-P) and two from the Prosperous Justice Party (PKS).

The United Development Party (PPP), Democratic Party (PD),
National Mandate Party (PAN) and the National Awakening Party
(PKB) each have three representatives on the committee, while the
Democratic Star Pioneer (BPD), Reform Star Party (PBR) and
Prosperous Peace Party (PDS) have one each.

Agusman, who also chairs House Commission VII on energy and
mineral resources, said Pertamina's board of directors originally
decided to buy the tankers to strengthen its fleet. Following a
shake-up of the board, the new directors turned around and sold
the tankers.

One element of the sale that has raised questions is
Pertamina's failure to receive approval from the House for the
sale. "The law requires our approval because the tankers were
state assets," said Agusman.

Article 46 of Law No. 1/2004 on the state treasury states
that the sale of state assets valued at more than Rp 100 billion
(US$10.41 million), except for land and buildings, must be
approved by the House.

Pertamina sold the two VLCCs in June 2004 to Norway's
Frontline Shipping Ltd. for $184 million, saying that it needed
the funds to ease cash flow problems. The tankers cost $130
million to build.

Ramson Siagian, a committee member from the PDI-P faction,
said if the team found any legal violations in the deal it would
submit a report to the Attorney General's Office.

"We expect to wrap up the investigation in October," he said.

The KPPU ruled in March that the tender for the sale of the
tankers was riddled with irregularities, and fined Frontline
Shipping, its local agent PT Equinox and the financial adviser on
the deal, Goldman Sachs.

However, the Central Jakarta District Court overturned the
KPPU ruling, saying there were no indications of unfair
competition in the tanker sale. The KPPU has filed an appeal with
the Supreme Court.

Commenting on the court's ruling, Agusman said the House
committee would look into different aspects of the sale.