Indonesia re-arrests Chevron exec amid tension with Big Oil

JAKARTA Wed May 22, 2013 10:45am BST

Related Topics

Quotes

   

JAKARTA May 22 (Reuters) - Authorities have bypassed a court order and re-arrested an executive at Chevron Corp's Indonesian unit in a graft case that highlights growing tension with big oil companies in a country struggling to reverse a decline in oil production.

The attorney general's office said on Wednesday it had re-arrested Bachtiar Abdul, an executive at PT Chevron Pacific Indonesia, despite a Nov. 27 court order that cleared him of any wrongdoing and released him from detention.

Bachtiar was one of four Chevron employees detained on Sept. 26 in an investigation into possible corruption at a Sumatra cleanup site set up to remove toxins secreted into the soil after drilling by Chevron, which has operated in Indonesia for more than 90 years.

Two months later, South Jakarta District Court ordered his release, citing a lack of evidence of any criminal activity. He was re-arrested on Friday, said Setia Untung, a spokesman for the attorney general's office, which accuses him of abusing his authority, breaking the law and causing state losses.

The case adds to mounting concern among multinational companies over rising economic nationalism. Indonesia has received repeated warnings from energy and mining companies over legal uncertainty, particularly after a recent spate of court decisions including an order in November to dismantle the domestic oil and gas regulator.

The new regulator, SKKMigas, has expressed its alarm over the case and the impact it will have on energy production by the former OPEC member for which oil imports have become a major factor behind a growing trade deficit.

"This issue will definitely disrupt exploration operations and the exploitation of oil and gas," regulator spokesman Elan Biantoro said. "Upstream oil and gas workers fear they may some day be hit by a similar situation if they are criminalised when a civil case becomes a criminal case."

"PROSECUTION STAGE"

The case pits Indonesia's biggest crude producer, PT Chevron Pacific Indonesia, against prosecutors in an investigation involving five Chevron employees and two contractors.

This month, Jakarta Corruption Court found the two contractors guilty of graft. They were jailed for 5 and 6 years respectively, fined and ordered to repay losses to the state totalling about $10 million.

However, according to both Chevron and SKKMigas, all costs involved in the project were borne by the company and therefore the state did not suffer any losses.

According to the attorney-general's office, the South Jakarta District Court order only referred to the investigation stage. The case was "now being processed in the prosecution stage," attorney-general spokesman Setia Untung said. "There's an investigation stage and a prosecution stage."

Bachtiar had failed twice to heed a summons, said Adi Toegarisman, who heads the attorney-general's office team investigating the Chevron case.

"He abused his authority, he broke the law and caused state losses as a consequence," he told Reuters. He declined to comment on how much the graft case had cost the state.

Indonesia's human rights commission, Komnas HAM, this week accused the attorney-general's office of violating the human rights of the Chevron employees and contractors. Its 400-page report will be sent to President Susilo Bambang Yudhoyono, the judicial commission and parliament.

Several major foreign energy companies have found themselves at odds with the government. Some have openly criticised the central bank's move to force them to initially put all their earnings onshore, which they argue contradicts the production sharing contracts they work under with the government.

Early this year, authorities effectively sacked the head of Exxon Mobil Corp's Indonesia operations by refusing to renew his work permit and complaining about the company's slow progress over a major new oil field.

French oil giant Total SA has also accused the government of dragging its heels in making a decision on the company's future investment in a large gas field it operates.

Energy Minister Jero Wacik has said the government would not get involved in the Chevron case. "If they're guilty punish them, if they're not, don't," he told a recent conference.

Chevron says Bachtiar's latest detention was a violation of the court order and of his legal and human rights.

"The courts must step in and protect the rights of our people against this kind of action," Chevron Indonesia said in a statement.

The increasingly testy exchanges come as Indonesia tries to meet surging domestic energy demand and reverse an almost two-decade decline in crude-oil production. With its oilfields old and running dry and no new finds on the horizon, investment in exploration will not likely help the country meet future demand any time soon.

FILED UNDER: