Police speed up probe into Karaha Bodas

Police speed up probe into Karaha Bodas

Abdul Khalik, The Jakarta Post, Jakarta

Police say they have intensified their investigation into alleged
graft in the Karaha Bodas power project in Garut, West Java, and
are planning to submit the case file to the prosecutors in the
first week of September.

"We completed the case file this month but had to delay
submitting it to the prosecutor's office as we found new
evidence. Also, we are waiting for the results of the audit by
the Development Finance Comptroller (BPKP)," said National Police
spokesman Insp. Gen. Paiman.

He did not give details about the "new evidence", but said
that the report from the BPKP, which the police received only
recently, indicated that the project was replete with corruption
and mark-ups.

Police have named former Pertamina geothermal division head
Priyanto, staffer Syafei Sulaiman and American Robert D.
McCutchen of the Karaha Bodas Company (KBC) as suspects for their
alleged roles in fictitious transactions and cost mark-ups during
the project.

Earlier, the police said that KBC and Pertamina officials had
colluded to forge transaction and payroll documents, among other
things, to allow them to inflate the cost of the project.

"With all the evidence we've gathered, we hope that we can
submit the case file by the first week of September at the
latest. After that, the prosecutors will bring the case to court
as soon as possible," said Paiman.

The U.S.-based KBC signed a contract with Pertamina in 1994 to
build two geothermal power plants in Garut, West Java. However,
the government decided to cancel the project at the height of the
economic crisis in 1997 as part of the austerity measures taken
to halt runaway inflation.

This prompted KBC to file for arbitration against Pertamina in
the Geneva Arbitration Court in 2000, which ruled in favor of
KBC. Pertamina was ordered by the panel of arbitrators in 2001 to
pay KBC a total of US$261.1 million in damages following the
suspension of the projects. The amount comprised $111.1 million
in costs, plus interest, and $150 million in loss of potential
profits.

The amount that Pertamina had to pay increased to $299 million
due to interest rate increases.

Pertamina unsuccessfully filed two appeals in Switzerland
before going to the Indonesian court as part of its desperate
efforts to thwart the Geneva award.

Pertamina President Director Widya Purnama said early this
week that he would not pay damages to KBC on the grounds that the
project was tainted by rampant corruption and mark-ups.

Widya and Coordinating Minister for the Economy Dorodjatun
Kuntjoro-Jakti sent a letter to National Police chief Gen. Da'i
Bachtiar to speed up the investigation into the alleged
corruption in the project.

KBC, meanwhile, has filed numerous lawsuits in the United
States, Hong Kong, Canada and Singapore to seek the seizure of
Pertamina assets in those countries.

The U.S. court subsequently confiscated Pertamina assets worth
$290 million in that country.

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