Pertamina defies compensation order

JAKARTA: The new head of Indonesia's state oil firm Pertamina yesterday said he would defy an order to compensate an internationally-backed energy firm, alleging corruption in the power project that caused the dispute. 

Widya Purnama, who was named Pertamina president last week, said he had no intention of abiding by the Swiss-based International Arbitration Court ruling to pay US$261mil (RM991mil) to the part US and Japan owned Karaha Bodas Company. 

“Pertamina will not pay the claim of Karaha Bodas because elements of corruption have been found,” he said. 

The dispute centres on a US$380mil (RM1.44bil) geothermal energy project in West Java that was suspended in 1997 as Indonesia's economy floundered during the regional financial crisis. 

Officials said that the closure complied with advice from the International Monetary Fund, which was invited to help overcome the crisis.  

The move, however, prompted Karaha Bodas's US investors to file a lawsuit. 

Indonesia has also handed down a rare life sentence to an official from the country's third largest bank, PT Bank Negara Indonesia for a graft conviction. 

Chief judge Soedarto, who delivered the sentence, said Edy Santosa, 51, a senior BNI official, was found guilty by the South Jakarta court on Monday of illegally disbursing more than one trillion rupiah (RM409.6mil) worth of export credits. 

Another BNI banker, Koesadiyuwono, was sentenced to 16 years in jail for failing to stop the illegal disbursement, Soedarto said.  

“It is now the time to get tough on corruption cases. If there is enough evidence then we should hand down harsh sentences,” he said. – AFP