Prosecutors are to investigate the case of the Pertamina tankers sale.
STACKS of documents were submitted to the Gedung Bundar (the Round House). The documents contain a myriad of things, from reports on the sale of tankers to the statements of Pertamina top officials before the House of Representatives (DPR). The submitter is the DPR Special Committee for Pertamina Tankers, formed to probe the 2004 sale of two Pertamina tankers categorized as very large crude carriers (VLCC).
Over the past three months, these documents have been painstakingly scrutinized by prosecutors at the Attorney General’s Office (AGO) in the Round House, the “headquarters” of the prosecutors investigating cases of corruption. Over the past month, the prosecutors have been intensively investigating the sale of the two Pertamina tankers involving former State Minister for State-Owned Enterprises (SOEs) Laksamana Sukardi, which has allegedly caused the state to suffer a loss of up to US$56 million.
The fate of this former Pertamina Chief Commissioner is on the line. “These weeks we’re going to elevate the status of this case to the investigative level,” said a prosecutor, one of the case investigators, to Tempo Thursday last week. “Most probably he’ll become a suspect.”
Earlier, the possible elevation of the case from the level of inquiry to the level of investigation was already mentioned by Hendarman Supanji, Junior Attorney General for Special Crimes. On Thursday a fortnight ago, this head of the Team to Eradicate Crimes of Corruption said that in April the AGO and the Corruption Eradication Commission (KPK) would finalize the case. “If the KPK finds elements of crime first, the case can directly be brought to the level of investigation. But, if the AGO finds them first, we will bring the status to the level of investigation,” said Hendarman.
This is the first time an alleged corruption case has been simultaneously scrutinized by the KPK and the AGO. The case went to the KPK first, two years ago. The KPK has also summonsed a number of witnesses for statements. However, so far the examination of the case seemed to progress sluggishly. “We continue to probe. The elements of causing financial losses to the state have not been found yet,” said KPK Deputy Chairman Tumpak Hatorangan Panggabean.
The case that implicates Laksamana began in November 2002 when Pertamina placed an order for two 260,000-ton tankers with Hyundai Heavy Industries in South Korea. Two years later, before the tankers were ready, Pertamina decided to sell them reasoning that they were in danger of being confiscated as Pertamina was undergoing litigation with Karaha Bodas Company.
So the bidding for the two tankers was offered with Goldman Sachs as the financial advisor. Of about 40 interested parties, the seven top bidders were selected, four of whom, including Frontline, made the bidding through an agent, PT Equinox. Of the seven, three were selected: Essar Shipping Ltd, Overseas Shipholding, and Frontline. Subsequently Frontline was declared the winner with an offer of US$184 million. It turned out that Frontline had just paid US$170.87 million. Ever since then, rumors about the tankers tender spread. Pertamina was accused of illicit cooperation with the tender winner.
The Business Competition Supervisory Commission (KPPU) intervened. The KPPU concluded there had been a conspiracy in the sale of the tankers that made Frontline the winner, thus incriminating Laksamana. According to the KPPU, the two vessels were sold cheaply when compared with market prices of around US$204 million. As a result, the state suffered a loss of US$50 million or about Rp500 billion.
The KPPU accused Pertamina of committing a number of violations. For example, Laksamana approved the tankers sale on June 11 while the Finance Minister issued a permit on July 7, 2004. Then the KPPU penalized, among others, Goldman with a fine of Rp19 billion and Frontline Rp25 billion. The KPPU also ordered the reporting of the actions of Pertamina’s directors and commissioners to its shareholders meeting.
Pertamina, objecting to the decision, brought the case to court. “In fact, the sale benefited the state,” said Laksamana. Laksamana affirmed that everything had gone through the correct procedure and there had been no corruption, collusion, and nepotism practices. The court accepted Pertamina’s complaint, and the case went to the Supreme Court. On November 29, 2005, the Chief Justice knocked the gavel, indicating there had been a conspiracy in the tankers sale case. Laksamana was cornered.
The case “heated up” after the DPR formed a Special Tanker Committee. “It has nothing to do with politics. What we see is that the state suffered a huge loss in the sale of the tankers,” said the Special Committee’s Deputy Chairman Gayus Lumbun who is also an Indonesian Democratic Party of Struggle (PDI-P) member. A number of leading PDI-P figures believe that even though Laksamana was a PDI-P member during the course of the case, the case would not affect the party. “There has been no money flowing from Laksamana to the party’s coffer. I know this well,” said head of the PDI-P Legal Advocacy Board, Syarif Bastaman.
Afterward the Special Committee declared Laksamana the person most responsible for the case. “Members of the board of directors who did not approve of the tankers sale were fired by Laksamana,” said Gayus. The DPR had repeatedly urged the attorney general to probe into Laksamana’s involvement. A host of documents relating to the case was “donated” by the DPR to the AGO.
Unlike the KPK, it turned out that the AGO moved fast. Hendarman appointed six prosecutors to look into the case. No fewer than 30 individuals, including Laksamana, have been questioned. The Finance Development Controller had also been asked to calculate the financial losses suffered by the state as a result of the tankers sale. “In the near future, a team of prosecutors will be leaving for Korea to inspect the shipyard,” said a prosecutor.
A Tempo source at the AGO said Laksamana could not possibly escape from this case. “One of the proofs is the Supreme Court’s ruling,” he said. The source affirmed that actually the sale had not benefited the state. “We see it from the market prices, not the prices on paper,” said the source. The prosecutors team, added the source, is just awaiting the figures of the amount of the state’s loss which the Finance Development Controller will submit. “However, the initial evidence we have in our possession is enough to raise the status of the case to the level of investigation.”
On Thursday last week when met by Tempo, Attorney General Abdul Rahman Saleh did not deny the reports that the tankers case will be investigated soon. “I think so,” he said. The AG dismissed voices saying that there had been a “competition” between the KPK and the AGO to lay hands on the case for a probe. “It’s not a competition. Whoever is ready first will go ahead. The KPK is understaffed,” he said.
When asked for confirmation about Laksamana’s being named a suspect, Abdul Rahman was unwilling to answer. “The sure thing is, we have experienced no difficulties in probing the case,” he said.
L.R. Baskoro, Abdul Manan
Tempo Magazne, No. 34/VII/Apr 24 - 30, 2007
After the Sale
THE case of Pertamina’s two VVLC tankers sale has not yet uncovered the person most responsible. Despite the fact that the Supreme Court stated there had been a conspiracy behind the sale of the giant vessels, to date nobody has become a suspect.
November 2002
Pertamina, then under CEO Baihaki Hakim, places an order for two giant oil tankers with Hyundai Heavy Industry in Ulsan, South Korea. Each cost US$65 million. The vessels were slated for completion by July 2004.
October 2003
The Pertamina board of directors decides to sell the two tankers on condition that the sale is made through the study of an independent consultant. Independent consultant, Japan Marine, states the ships are not to be sold.
April 15, 2004
The meeting of the boards of directors and commissioners decide that the tankers must be sold because Pertamina suffers a deficit. Goldman Sachs is named a financial advisor.
May 2004
Goldman invites 42 companies “interested in the Pertamina tankers.” Four companies, including Frontline, a Swedish company, do not make direct bidding as required but through a broker, PT Equinox.
June 2004
Frontline is named the winner, considered possessing the highest value despite its lower bid than the second winner. Frontline raises the bid to US$184 million.
July 23, 2004
The Business Competition Supervisory Commission (KPPU) begins questioning Pertamina’s boards of directors and commissioners.
March 3, 2005
The KPPU views the sale of the two tankers smacked of conspiracy causing the state to suffer a loss of US$20-56 million. Pertamina, dissatisfied with the KPPU’s decision, takes the case to the Central Jakarta District Court.
March 2005
State Minister for SOEs Sugiharto (below) hands over the tankers case to the KPK for scrutiny.
July 25, 2005
The court rejects and annuls KPPU’s decision. The KPPU appeals.
November 29, 2006
The Supreme Court’s ruling states there was a conspiracy in the tankers sale and upholds the KPPU’s decision.
January 17, 2007
The House of Representatives (DPR)’s Special Committee for Pertamina Tankers Sale mentions indications of corruption in the sale of the two vessels.
February 2, 2007
The DPR hands over the result of the Special Committee’s work to the AGO and the KPK.
March 16, 2007
Laksamana Sukardi is questioned by the KPK at the AGO. This former SOEs Minister affirms that the sale of the tankers was made in accordance with procedure and did not disadvantage the state.
March 27, 2007
The KPK questions Laksamana for five hours. At least 20 questions are posed by the KPK to Laksamana about the sale of the tankers.
STACKS of documents were submitted to the Gedung Bundar (the Round House). The documents contain a myriad of things, from reports on the sale of tankers to the statements of Pertamina top officials before the House of Representatives (DPR). The submitter is the DPR Special Committee for Pertamina Tankers, formed to probe the 2004 sale of two Pertamina tankers categorized as very large crude carriers (VLCC).
Over the past three months, these documents have been painstakingly scrutinized by prosecutors at the Attorney General’s Office (AGO) in the Round House, the “headquarters” of the prosecutors investigating cases of corruption. Over the past month, the prosecutors have been intensively investigating the sale of the two Pertamina tankers involving former State Minister for State-Owned Enterprises (SOEs) Laksamana Sukardi, which has allegedly caused the state to suffer a loss of up to US$56 million.
The fate of this former Pertamina Chief Commissioner is on the line. “These weeks we’re going to elevate the status of this case to the investigative level,” said a prosecutor, one of the case investigators, to Tempo Thursday last week. “Most probably he’ll become a suspect.”
Earlier, the possible elevation of the case from the level of inquiry to the level of investigation was already mentioned by Hendarman Supanji, Junior Attorney General for Special Crimes. On Thursday a fortnight ago, this head of the Team to Eradicate Crimes of Corruption said that in April the AGO and the Corruption Eradication Commission (KPK) would finalize the case. “If the KPK finds elements of crime first, the case can directly be brought to the level of investigation. But, if the AGO finds them first, we will bring the status to the level of investigation,” said Hendarman.
This is the first time an alleged corruption case has been simultaneously scrutinized by the KPK and the AGO. The case went to the KPK first, two years ago. The KPK has also summonsed a number of witnesses for statements. However, so far the examination of the case seemed to progress sluggishly. “We continue to probe. The elements of causing financial losses to the state have not been found yet,” said KPK Deputy Chairman Tumpak Hatorangan Panggabean.
The case that implicates Laksamana began in November 2002 when Pertamina placed an order for two 260,000-ton tankers with Hyundai Heavy Industries in South Korea. Two years later, before the tankers were ready, Pertamina decided to sell them reasoning that they were in danger of being confiscated as Pertamina was undergoing litigation with Karaha Bodas Company.
So the bidding for the two tankers was offered with Goldman Sachs as the financial advisor. Of about 40 interested parties, the seven top bidders were selected, four of whom, including Frontline, made the bidding through an agent, PT Equinox. Of the seven, three were selected: Essar Shipping Ltd, Overseas Shipholding, and Frontline. Subsequently Frontline was declared the winner with an offer of US$184 million. It turned out that Frontline had just paid US$170.87 million. Ever since then, rumors about the tankers tender spread. Pertamina was accused of illicit cooperation with the tender winner.
The Business Competition Supervisory Commission (KPPU) intervened. The KPPU concluded there had been a conspiracy in the sale of the tankers that made Frontline the winner, thus incriminating Laksamana. According to the KPPU, the two vessels were sold cheaply when compared with market prices of around US$204 million. As a result, the state suffered a loss of US$50 million or about Rp500 billion.
The KPPU accused Pertamina of committing a number of violations. For example, Laksamana approved the tankers sale on June 11 while the Finance Minister issued a permit on July 7, 2004. Then the KPPU penalized, among others, Goldman with a fine of Rp19 billion and Frontline Rp25 billion. The KPPU also ordered the reporting of the actions of Pertamina’s directors and commissioners to its shareholders meeting.
Pertamina, objecting to the decision, brought the case to court. “In fact, the sale benefited the state,” said Laksamana. Laksamana affirmed that everything had gone through the correct procedure and there had been no corruption, collusion, and nepotism practices. The court accepted Pertamina’s complaint, and the case went to the Supreme Court. On November 29, 2005, the Chief Justice knocked the gavel, indicating there had been a conspiracy in the tankers sale case. Laksamana was cornered.
The case “heated up” after the DPR formed a Special Tanker Committee. “It has nothing to do with politics. What we see is that the state suffered a huge loss in the sale of the tankers,” said the Special Committee’s Deputy Chairman Gayus Lumbun who is also an Indonesian Democratic Party of Struggle (PDI-P) member. A number of leading PDI-P figures believe that even though Laksamana was a PDI-P member during the course of the case, the case would not affect the party. “There has been no money flowing from Laksamana to the party’s coffer. I know this well,” said head of the PDI-P Legal Advocacy Board, Syarif Bastaman.
Afterward the Special Committee declared Laksamana the person most responsible for the case. “Members of the board of directors who did not approve of the tankers sale were fired by Laksamana,” said Gayus. The DPR had repeatedly urged the attorney general to probe into Laksamana’s involvement. A host of documents relating to the case was “donated” by the DPR to the AGO.
Unlike the KPK, it turned out that the AGO moved fast. Hendarman appointed six prosecutors to look into the case. No fewer than 30 individuals, including Laksamana, have been questioned. The Finance Development Controller had also been asked to calculate the financial losses suffered by the state as a result of the tankers sale. “In the near future, a team of prosecutors will be leaving for Korea to inspect the shipyard,” said a prosecutor.
A Tempo source at the AGO said Laksamana could not possibly escape from this case. “One of the proofs is the Supreme Court’s ruling,” he said. The source affirmed that actually the sale had not benefited the state. “We see it from the market prices, not the prices on paper,” said the source. The prosecutors team, added the source, is just awaiting the figures of the amount of the state’s loss which the Finance Development Controller will submit. “However, the initial evidence we have in our possession is enough to raise the status of the case to the level of investigation.”
On Thursday last week when met by Tempo, Attorney General Abdul Rahman Saleh did not deny the reports that the tankers case will be investigated soon. “I think so,” he said. The AG dismissed voices saying that there had been a “competition” between the KPK and the AGO to lay hands on the case for a probe. “It’s not a competition. Whoever is ready first will go ahead. The KPK is understaffed,” he said.
When asked for confirmation about Laksamana’s being named a suspect, Abdul Rahman was unwilling to answer. “The sure thing is, we have experienced no difficulties in probing the case,” he said.
L.R. Baskoro, Abdul Manan
Tempo Magazne, No. 34/VII/Apr 24 - 30, 2007
After the Sale
THE case of Pertamina’s two VVLC tankers sale has not yet uncovered the person most responsible. Despite the fact that the Supreme Court stated there had been a conspiracy behind the sale of the giant vessels, to date nobody has become a suspect.
November 2002
Pertamina, then under CEO Baihaki Hakim, places an order for two giant oil tankers with Hyundai Heavy Industry in Ulsan, South Korea. Each cost US$65 million. The vessels were slated for completion by July 2004.
October 2003
The Pertamina board of directors decides to sell the two tankers on condition that the sale is made through the study of an independent consultant. Independent consultant, Japan Marine, states the ships are not to be sold.
April 15, 2004
The meeting of the boards of directors and commissioners decide that the tankers must be sold because Pertamina suffers a deficit. Goldman Sachs is named a financial advisor.
May 2004
Goldman invites 42 companies “interested in the Pertamina tankers.” Four companies, including Frontline, a Swedish company, do not make direct bidding as required but through a broker, PT Equinox.
June 2004
Frontline is named the winner, considered possessing the highest value despite its lower bid than the second winner. Frontline raises the bid to US$184 million.
July 23, 2004
The Business Competition Supervisory Commission (KPPU) begins questioning Pertamina’s boards of directors and commissioners.
March 3, 2005
The KPPU views the sale of the two tankers smacked of conspiracy causing the state to suffer a loss of US$20-56 million. Pertamina, dissatisfied with the KPPU’s decision, takes the case to the Central Jakarta District Court.
March 2005
State Minister for SOEs Sugiharto (below) hands over the tankers case to the KPK for scrutiny.
July 25, 2005
The court rejects and annuls KPPU’s decision. The KPPU appeals.
November 29, 2006
The Supreme Court’s ruling states there was a conspiracy in the tankers sale and upholds the KPPU’s decision.
January 17, 2007
The House of Representatives (DPR)’s Special Committee for Pertamina Tankers Sale mentions indications of corruption in the sale of the two vessels.
February 2, 2007
The DPR hands over the result of the Special Committee’s work to the AGO and the KPK.
March 16, 2007
Laksamana Sukardi is questioned by the KPK at the AGO. This former SOEs Minister affirms that the sale of the tankers was made in accordance with procedure and did not disadvantage the state.
March 27, 2007
The KPK questions Laksamana for five hours. At least 20 questions are posed by the KPK to Laksamana about the sale of the tankers.
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