Pertamina says $29m seized in Karaha case

Pertamina says $29m seized in Karaha case

State oil and gas firm PT Pertamina said US$29 million of its funds had been seized in the U.S. after the State Supreme Court of New York rejected an appeal by the company against an arbitration award to Karaha Bodas Co.

In a judgment filed Oct. 4 in New York, the U.S. Court rejected Pertamina's bid to nullify the 2000 arbitration award to Karaha Bodas, said Pertamina's Finance Director Alfred Rohimone. Karaha is seeking $299 million from Pertamina, which includes $261 million awarded by an arbitration court over a canceled power project and lost earnings.

"The court orders us to pay Karaha Bodas' claim," Alfred said. "We have paid some because two days after the judgment, $29 million was seized from our U.S. accounts."

In August 2002, a U.S. District Court froze $285 million of Pertamina's funds in the U.S. The $29 million belongs to Pertamina while the rest belongs to Indonesia's government. The $29 million was in accounts at branches of Bank of America and Bank of New York.

Karaha, owned by FPL Group Inc., Caithness Energy LLC and other U.S. investors, is seeking to recover its investment in an Indonesian power project and money awarded by arbitrators for lost earnings. The Indonesian government halted the venture in 1998, as the economy sank into recession.

Pertamina earlier said it would not pay Karaha Bodas until local police finish a corruption probe into the cancellation of power projects. -- Bloomberg