Total gets pleasant surprise from plaintiff's witness
Fabiola Desy Unidjaja, The Jakarta Post, Jakarta
Total E&P Indonesie's defense in a controversial bankruptcy case brought against it by former contractors received a boost today when a witness testified there were no signed agreements between the subsidiary and a subcontractor.
A witness from the Development Finance Comptroller (BPKP) told the Commercial Court hearing on Thursday there were no contractual relations between Total and subcontractor PT Istana Karang Laut (IKL).
Witness Leonardo Hutahuruk said the contract to construct platforms and a gas processing plant in Tunu field, East Kalimantan, was made between Total and contractor PT Sanggar Kaltim Jaya (SKJ).
"Total knew that IKL was the subcontractor for the project since both contractors had a different scope of work," the witness told the hearing.
IKL is the first plaintiff of the bankruptcy petition case while SKJ is the second plaintiff despite its former position as Total's main contractor for the project.
Leonardo was a member of the BPKP team assigned to audit the Tunu oil field project, which is the subject of the dispute between Total and its two contractors.
In his testimony, Leonardo said that based on the BPKP's conclusion, Total was obligated to pay some US$3.952 million compensation to SKJ and $3.178 million to IKL.
Total -- a local affiliation of the world's second largest gas producer Total SA -- has refused to pay the claims. In the previous trial, the company asked the court to reject the asset preservation order as requested by both contractors.
The order would have stopped Total from selling any of its assets in the country.
Answering Total lawyer's questions on Total's contractual relations with IKL, Leonardo said he never saw invoices from the subcontractor addressed to Total.
However, he insisted that during the audit the BPKP team identified there were certain parts of the project constructed by IKL.
"Both plaintiffs original demand (of compensation) was $18 million but our findings revealed that the compensation is only worth $7.131 million," he said.
Lawyer Lelyana Santoso disclosed a number of letters from Total addressed to the Oil and Gas Upstream Regulatory Agency (BP Migas), objecting to the audit result since some of the documents were disputed during the audit.
The documents showed SKJ had failed to complete the project by the due time and, according to the main contract, should be penalized for the delay.
"If there were any documents that could change the amount of the claim, they should have been taken into account," Leonardo said.
In their defense, the contractors' lawyer OC Kaligis said that his clients had been invited by Total as separate units during the out-of-court settlement to end the dispute before the case was finally submitted to the court.
Total signed a $19 million contract in 2001 with the contractors. It had paid a total of $25 million in 2003 for several adjustments made during the construction, or $6 million more than the amount originally agreed upon.
The case is the first bankruptcy petition against an oil company in Indonesia.
In 2003, Manulife and Prudential insurance companies were declared bankrupt by the court.
The trial was adjourned on Monday.