Joint venture firms ready to face lawsuit

Joint venture firms ready to face lawsuit

JAKARTA (JP): Executives of two joint venture water management
companies insisted on Thursday that they were "ready to answer" a
lawsuit filed last week by a group of 17 lawyers, who allege that
their cooperative agreements are illegal.

Giving no details of their legal preparation, Presidents of PT
Pam Lyonnaise Jaya (Palyja) Christian Michelon and PT Thames Pam
Jaya (TPJ) John Hurcom said in a joint statement that in the
process to set up the joint ventures they "had scrupulously
followed the Ministry of Home Affairs instruction No. 21/1996".

The cooperative agreement between city-owned water company
PDAM Jaya and French company Suez Lyonnaise des Eaux to form
Palyja, and PDAM Jaya and British company Thames Water Overseas
Ltd. to set up TPJ, was the result of a one-and-a-half year
negotiation under the coordination of officials from the
Indonesian ministries of home affairs, public works, finance, and
the National Development Planning Board, they said.

"PDAM Jaya was assisted by international lawyers and financial
advisors as well as consultants appointed by the World Bank," the
two executives said in the statement entitled Palyja and TPJ are
Ready to Answer.

The 17 lawyers, grouped in the Association of Indonesian
Reform Era Lawyers, filed a lawsuit on Friday at the Central
Jakarta District Court against Governor Sutiyoso, PDAM Jaya and
nine other parties over the cooperative agreements on water
management in the capital.

The lawyers, who also claim to represent the Jakarta chapter
of the Indonesian Water Contractors Association (Akaindo) and
Jakarta residents, want the court to revoke the agreements
between PDAM Jaya and Suez Lyonnaise des Eaux and Thames Water,
saying that the deals are illegal because the two foreign
companies were appointed directly and not after a competitive
bidding process as required by presidential decree No. 16/1994.

They asked the court to order the foreign companies to return
a total of Rp 240 billion in profits to the public.

The lawyers also asked the court to order the defendants to
pay Rp 100 billion for losses suffered by Akaindo members and
Jakartans.

According to company directors Michelon and Hurcom, the
agreements signed on June 6, 1997 and effective from the
beginning of February this year, were approved by the Minister of
Home Affairs on Aug. 25, 1997.

"During the first seven months of operation Rp 178 billion was
collected from consumers," they said.

Of this amount, Rp 137 billion was paid to the two joint
venture companies, which have spent more than Rp 186 billion on
operation costs during the same period, they said.

"While the rest, amounting to Rp 41 billion, has been paid to
PDAM Jaya.

All payments were made in strict conformity with the
contract," they added.

Governor Sutiyoso stressed on Monday his readiness to face the
lawsuit, saying that he has set up a team of lawyers to defend
him. (jun)