KPPU sees fault in tanker sale
KPPU sees fault in tanker sale
Tony Hotland, The Jakarta Post, Jakarta
The Business Competition Supervisory Commission (KPPU) said on
Friday it had discovered "strong indications" that Law No. 5/1999
on monopolies and unfair competition was violated in the sale of
two oil tankers by state oil and gas company PT Pertamina.
If the indications were true, the sale could be annulled and
any party found guilty in the tender process could be either
fined a maximum Rp 25 billion (US$2.69 million) or an unlimited
charge for damages.
"After a 30-day preliminary investigation and hearing with the
parties concerned, we have come to a conclusion that there are
indeed strong indications of unfair competition in determining
the winner of the Pertamina tender for its two Very Large Crude
Carriers (VLCCs)," said KPPU member Sutrisno Iwantono.
Sutrisno said the KPPU had held hearings with newly installed
Pertamina president Widya Purnama and former president Ariffi
Nawawi, as well as State Minister of State Enterprises Laksamana
Sukardi in his capacity as Pertamina chief commissioner.
"We've also been corresponding with (India-based) Indonian
Essar Shipping, one of the participants in the tender, and of
course, (Bermuda-based) Frontline Ltd. as the winner," he said.
However, the KPPU refused to elaborate on the indication of
violations it found in the tender process, saying only that the
tender may have violated Articles 16, 19(d) and 22 of the
Antimonopoly Law.
Article 16 prohibits business players from making agreements
with foreign parties that may lead to a monopoly or unfair
competition.
Article 19(d) prohibits business players from discriminating
against other players, while Article 22 prohibits conspiring with
parties in determining the winner of a tender.
Pertamina sold the two VLCCs in June to Norway's Frontline
Shipping Ltd. for $184 million, despite protests by Pertamina's
labor union and a recommendation from the House of
Representatives that the company hold on to the tankers for long-
term benefits.
Activists and the labor union have alleged that the tanker
tender was marred by collusion. They also pointed to a conflict
of interest in the appointment of consultancy firm Goldman Sachs
as financial adviser to the tender, as the firm owned a minority
share in Frontline.
Pertamina, which claimed the tanker sale was aimed at easing
the company's cash flow problem, brushed aside the allegations,
saying the tender was transparent. It also insisted that
Frontline won the tender fairly because other bidders could not
provide a 20 percent down payment and a $5 million bid bond for
each of the vessels.
Pertamina delivered one tanker to Frontline last month, and is
expected to deliver the second one this month.
Elsewhere, Sutrisno said the KPPU had sent letters to the
Pertamina management, Laksamana and Minister of Finance Boediono
to take into account the legal process being undertaken by the
commission before delivering the second tanker to Frontline.
"However, we didn't specify in the letters whether we demanded
that they postpone delivery. I'm sure their lawyers know what
they must do regarding this legal process. Just remember that
we've warned them about this," he said.
Sutrisno said the KPPU would investigate further upon an
expectation it would uncover more details from many parties,
including experts.
"The process will take another 90 days maximum, then we'll
deliver a verdict on the case," he said.