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.