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.