Marubeni denies sweetened deal

Marubeni denies sweetened deal

TOKYO (AFP) - Japanese trading house Marubeni Corp. reacted with fury to a newspaper report Wednesday that alleged it received political favors in a crucial Indonesian debt- restructuring deal.

The company dismissed the Asian Wall Street Journal's charge that the deal was the result of political pressure on President Abdurrahman Wahid from Japan, Indonesia's biggest aid donor and creditor.

"The article is completely inaccurate," Marubeni spokesman Kazunori Fukuda told AFP. "It is not even worth our comment."

The newspaper said Wahid was under fire over his approval of a rescue plan for PT Chandra Asri, a debt-ridden petrochemical joint venture between Marubeni, the Indonesian state and two other Japanese firms.

The International Monetary Fund and key aides were unhappy over allegedly preferential terms granted to Marubeni, the article said.

Marubeni said on May 10 it had agreed to a 100-million-dollar swap of loans for shares in Chandra Asri, taking the total owed it by the petrochemical venture down to around 600 million dollars.

The Indonesian government also planned to convert into equity its loans of US$469 million to Chandra Asri, Marubeni said.

The trader's outstanding loans to the firm would be repaid over nine years at an interest rate 2.5 percentage points over the London interbank offered rate, the Asian Wall Street Journal said.

The restructuring left the Indonesian Bank Restructuring Agency saddled with 80 percent equity in Chandra Asri, it said.

The rescue plan had left the agency "with what many view as an unattractive asset and the added burden of paying back the petrochemical company's debts to Marubeni," the article said.

"According to people familiar with the negotiations, Mr Wahid's decision to back the deal was influenced by his wish to remain on good terms with Japan, which is by far the largest bilateral lender to Indonesia."

But the Marubeni spokesman angrily dismissed the allegation that the deal was the result of back-room political maneuvering.

"The agreement was fair and there was no pressure at all from the Japanese government behind the deal," Fukuda said.

"We are not even going to bother responding (formally) to the article or to take action."

Marubeni has cut its group net profit forecast to two billion yen (US$18 million) for the year to March 31, partly due to its involvement in the Indonesian venture.

Chandra Asri is capitalized at $1.05 billion and operates a plant in West Java that can produce up to 510,000 tons of ethylene a year.

The Indonesian government will negotiate to sell all of its stake in Chandra Asri to the US-British oil major BP Amoco, Japan's Nihon Keizai Shimbun business daily said earlier this month.

Options under consideration included asking one of the oil majors to become a partner in the venture, Marubeni said in response.