KBC used forged documents to back its claim: Police
Abdul Khalik, Jakarta
The police have accused U.S.-based Karaha Bodas Company (KBC) of using fake documents in its lawsuit against state oil and gas firm PT Pertamina at the International Court of Arbitration.
National Police anticorruption chief Brig. Gen. Indarto said on Wednesday that the KBC and certain Pertamina officials had fabricated transaction and payroll documents, among others, to allow them to mark up the cost of the Karaha Bodas geothermal power project.
"We have discovered the fake documents, which we believe were used at the arbitration court," Indarto told reporters.
The police are investigating a corruption case involving the Karaha Bodas power project and named three suspects on Tuesday, including the former head of the geothermal division at Pertamina, Priyanto, his subordinate Syafei Sulaiman and Robert D. McCutchen of the KBC for their roles in concocting fictitious transactions to inflate the cost of the project.
The government hopes if it can prove that the KBC power plant project was mired in corruption, it can avoid paying damages to the U.S. firm.
The KBC signed a contract with Pertamina to develop two geothermal power plants in Garut, West Java, but the project, along with dozens of other power projects, was suspended by the government in the wake of the late 1990s economic crisis.
The firm filed a lawsuit in 2000 against Pertamina for breach of contract at the Geneva-based arbitration court. The following year, the court ruled in favor of the KBC and ordered Pertamina to pay US$261.1 million in damages.
Pertamina has not yet paid the damages, as the government is attempting to negotiate with the KBC to reduce the amount, which has now inflated to over $290 million due to accumulated interest.
Pertamina previously filed two appeals to the court, but was unsuccessful in both. A U.S. court froze Pertamina's accounts in that country at the request of the KBC, while the U.S. Supreme Court is expected to rule on the case in September.
Although State Minister of State Enterprises Laksamana Sukardi has said in national media that the government would order Pertamina to honor the arbitration court's ruling and pay damages, National Police chief Da'i Bachtiar suggested to withhold payment until the completion of the corruption proceedings.
"We have two choices here. If we can take the (corruption) case to court quickly and get a verdict, we can use it as a basis to avoid paying damages. Or, if it looks like the court will take a long time to make a decision, we can pay now but reclaim it later," said Indarto.
Legal expert Luhut M. Pangaribuan said the new evidence could be used to demand the annulment of the arbitration court's ruling.
Under Indonesian law, a decision based on fake documentation must be annulled.
"Although it is a little too late, we must try to present the new evidence to the U.S. court to avoid paying damages after we get a decision from our court. However, it will all depend on their interpretation as to whether the new evidence is valid," he said.