Official behind Freeport deal defends Ginandjar

JAKARTA (JP): Coordinating Minister for Economy, Finance and Industry Ginandjar Kartasasmita has been given the support of a former subordinate in his fight to clear his name of allegations of malfeasance in the award of a contract of works to copper and gold mining company PT Freeport Indonesia.

Rachman Wiriosudarmo, who led the Ministry of Mines and Energy team charged with renegotiating Freeport's contract, said on Friday that he had seen no evidence that Ginandjar helped the Bakrie Group purchase a 10 percent stake in Freeport Indonesia.

"I know that Ginandjar and (Bakrie's chairman) Aburizal Bakrie were close friends. But, I don't think Ginandjar helped him to purchase the stake," Rachman told The Jakarta Post on Friday.

Rachman served as the ministry's director in charge of supervising mining enterprises from March 1989 to Sept. 1991, a key position in the issue and renegotiation of contracts of works.

Freeport, currently 80 percent owned by the United States copper and gold mining company Freeport McMoRan Copper & Gold, holds rights to exploit the world's largest copper and gold reserves in Irian Jaya.

Jeffrey A. Winters, a professor of political economy at Northwestern University in Chicago, USA, said earlier this week that Ginandjar had colluded with Aburizal to help the latter acquire a stake in Freeport while he served as minister of mines and energy from 1988 to 1993.

Winters' allegations have upset Ginandjar, who has denied any wrongdoing.

Meanwhile, the police are still collecting evidence to charge Winters with defaming Ginandjar and the Indonesian government following an order from President B.J. Habibie. However Winters has already left the country.

Rachman said that prior to renewing the contract of works in December 1991, Ginandjar had sent a letter to then minister of finance J.B. Sumarlin offering the government the chance to increase its share in the company from 9 percent to 20 percent.

"Had Sumarlin accepted the offer, we would have put a clause in the renewed contract obliging Freeport McMoRan to sell up to 20 percent of Freeport's shares to the government or state enterprises," he said.

"But Sumarlin was only ready to increase the government's stake to 10 percent so we put a clause in the contract which permitted national companies to buy the remaining 10 percent of the shares," Rachman said.

Rachman said Freeport approached several indigenous businessmen, including Aburizal and Setiawan Djody, the chairman of the diversified Sedco business group, to see if they were interested in buying the 10 percent stake.

"It seems however that only Aburizal had enough cash to make the purchase," Rachman said.

In a related development, Secretary General of the Ministry of Mines and Energy Joko Darmono indicated on Friday that the government would renegotiate Freeport's contract of works if it found that graft had contributed to the awarding of the contract, adding that the contract contained a clause which would justify any such action.

Winters defends

Winters threatened with arrest by Indonesian authorities, Thursday defended his charges that the person spearheading the country's anti-corruption campaign is himself tainted by corruption.

On Thursday, Winters said there was extensive evidence that Ginandjar had engaged in corrupt practices - including a questionable business deal involving U.S. mining giant Freeport McMoRan Copper & Gold Inc. - and challenged Indonesian authorities to investigate.

To back his claims, Winters pointed to his own research, as well as an extensive report prepared by Indonesian think-tank Econit detailing the evidence against Ginandjar.

"This is a report written by a team of the most professional economists Indonesia has," Winters said in an interview with Dow Jones Newswires.

"Based on that careful report, I really think that any attorney general anywhere would want to look into this. In Indonesia, however, the reaction is to threaten and intimidate the person who raises the question."

On Wednesday, Justice Minister Muladi said that foreigners who insult a Cabinet minister could be arrested under Indonesian law. By midday Thursday, however, the Indonesian embassy in Washington had not received any notification of an order to arrest Winters or bar him from the country.

"As far as I know, we have not received any formal notification, so we think (the process) is not finished," said Mahendra Siregar, first secretary at the embassy.