http://www.asiasentinel.com/index.php?option=com_content&task=view&id=5404&Itemid=226
Indonesia Jails Chevron Contractor in Contested Case
Written by Our Correspondent
Thursday, 09 May 2013
Could be pumping for Indonesia soon...
Case involving award-winning project was originally dismissed by another
court
The director of a company that carried out an award-winning
bioremediation project for Chevron Pacific Indonesia has been ordered
imprisoned for five years for causing more than US$3 million in state losses in
a case almost universally condemned as trumped up in Indonesia's worsening
investment climate.
Ricksy Prematury, the director of Green Planet Indonesia (GPI), a company
hired by Chevron to carry out environmental cleanup projects on its behalf in
Sumatra, was also fined Rp200 million (US$20,000) by the Jakarta
Anti-Corruption Court or required to spend another two months in jail. The
court also ordered GPI to pay back the US$3.089 million within a month or face
a threat to have the state confiscate the company's assets.
The case has been percolating through the Indonesian court system for
months, much to the dismay of multinational investors, company officials,
diplomats and others, who fear it was politically motivated and an example of
lower-level officials harassing multinationals for financial or political gain.
It was originally dismissed by the South Jakarta District Court in December
2012, which ruled that the attorney general's office did not have sufficient
evidence to pursue it and ordered it dropped. The attorney general's office,
considered one of the government's most corrupt institutions, ignored the order.
Much of the case rested on testimony by a bioremediation expert, Edison
Effendi, who charged that GPI had ignored some processes in neutralizing the
polluted soil. However, Chevron Indonesia contested Effendi's testimony and
that of two other witnesses from Effendi's consulting firm, pointing out that
he had lost two earlier tenders to handle bioremediation projects for Chevron.
Taken together with rising regulatory uncertainty, delayed contract
approvals and a general climate of rising nationalism in the resource sector,
oil industry executives have said billions of dollars in investment is already
being delayed in the country.
Andrew White, managing director of the American Chamber of Commerce in
Indonesia, told the Financial Times: "It's wrong on so many levels," he said.
"Here is a company with a verifiable project that has won many awards. It seems
the attorney general was determined to bring a case against this company. If
this can happen to Chevron it could happen to anybody."
Chevron has said the project met all government standards for compliance
and also has yet to earn the company a dollar of remuneration under the cost
recovery scheme. The state, however, claimed that Chevron had received a
US$23.3 million cost recovery budget from the now-defunct upstream oil and gas
regulator BPMigas. Earlier during the trial, prosecutors said the cost recovery
budget was used to pay for what they called a "fictitious" bioremediation
project.
Citing, among other factors, "the continued criminalization of oil and
gas activities," Chevron told government regulators last year that it reserves
the right to reduce its investment in Indonesia, a move that would lead to
lower production if there were substantial negative changes to the country's
investment climate.
Multinational oil and gas executives from a number of companies have
repeatedly cited the remediation prosecution as an example of the government
allowing and perhaps even encouraging the harassment of multinational energy
companies as part of a strategy to lower the involvement of foreign companies
in the sector. Oil and gas companies provide nearly a third of Indonesia's
state budget revenue.
The prosecutor had originally requested that the court sentence Prematury
to 12 years in prison and fine him Rp1 billion or spend another six months in
jail. GPI was also found to be in violation of a government regulation issued
in 1999 on Hazardous and Poisonous Waste Management and another government
regulation issued in 2009 on Environment Protection and Management.
Sofaldi, one of three judges on the Anti-Corruption panel dissented,
saying he believed the bioremediation project had been completed by GPI, and
that GPI did not necessarily need a permit from the government to handle the
project because it was up to Chevron Indonesia to obtain the document.
The judge also raised questions over Effendi's testing, which he said was
done in an unverified laboratory seemingly established just for that purpose.
"The result is invalid and unscientific, moreover if used as basis for a
verdict," Sofialdi said, adding that Prematury should be freed from all charges.
Herlan bin Ompo, president director of PT Sumigita Jaya, another company
that carried out a bioremediation project for Chevron Pacific, told the news
site Kompas.com that the sample tested was taken on April 9, 2012, but tested
only two months later, on June 13, well beyond the recommended 14-day limit. He
is a suspect in the same case.
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