Police complete case files on corruption at KBC

Police complete case files on corruption at KBC

Abdul Khalik, Jakarta

The police announced on Tuesday that they were ready to hand over
to the prosecution service the case files on three suspects
allegedly involved in graft in the Karaha Bodas Company (KBC)
power project.

Some observers said this could help the government avoid
having to paying huge damages to the U.S.-based firm.

Previously, the police had named Priyanto, the former head of
the geothermal division at state oil and gas firm PT Pertamina,
one of his staff members, Syafei Sulaiman, and American Robert
McKichan as suspects for their alleged roles in fictitious
transactions and cost mark-ups during the geothermal power
project.

"We have found that there is enough evidence to conclude that
they were involved in graft during their terms as Pertamina
supervisors for the project by inventing fictitious transactions
and marking up the cost of the project," said Suyitno.

He said the police had yet to question McKichan, who is
abroad, as the American had refused to comply with the police
summons.

"We will forward his case file to the prosecutors even though
we haven't questioned him yet. He can be tried in absentia, if
necessary," said Suyitno.

He said that the police would continue to seek evidence on
whether KBC officers had bribed Pertamina to obtain the power
project without going through a tender.

Suyitno said that the police had questioned a large number of
witnesses in the case, including Minister of Energy and Mineral
Resources Purnomo Yusgiantoro and former top PLN official M.
Zuhal.

KBC signed a contract with Pertamina in 1994 to develop two
geothermal power plants in Garut, West Java. But in the wake of
the late 1990s economic crisis, the government canceled dozens of
power projects including the Karaha Bodas project.

This prompted KBC to bring Pertamina to a Geneva arbitration
board in 2000, which subsequently ruled in KBC's favor. The panel
ordered Pertamina to pay some US$261.1 million in damages to KBC.

Pertamina filed two appeals in Switzerland, but was
unsuccessful in both. A U.S. court froze Pertamina's bank
accounts in the U.S. at the request of KBC. The U.S. Supreme
Court is expected to rule on the case later this year.

State Minister for State Enterprises Laksamana Sukardi has
said that Pertamina should pay the damages, and honor the
decision of the arbitration panel.

But he said that the government would negotiate with KBC to
reduce the amount of damages Pertamina would have to pay. The
total amount to be paid now stands at around $290 million,
including interest.

Meanwhile, some observers have said that the government should
provide the police evidence on corruption to the U.S. court in
the hope of obtaining a ruling against KBC.

National Police chief Gen. Da'i Bachtiar has also said that
the government should not pay the damages pending the completion
prior to the bringing of the corruption proceedings to a final
conclusion.

KBC is controlled by the Florida-based FPL Group Inc. and
Caithness Energy LLC of New York, in a partnership with local
firm PT Sumarah Daya Sakti, which is linked to Tantyo Sudharmono,
the son of the country's former vice president Sudharmono.