AGO investigations director Arminsyah said suspects had been named in the case, including officials from KTE, which is entirely owned by East Kutai regency.

Previously deputy attorney general for special crimes Marwan Effendy said the transfer of shares
to KTE was carried without approval from the regional legislative council.

Sangatta Holdings Ltd., as demanded by a working contract with the government, had to divest a 20 percent stake in KPC to the central government, 12 percent to East Kalimantan administration and 18.6 percent to the East Kutai regency. All divestment processes were supposed to have been completed by 2003.

The transfer of shares to KTE was carried out in June 2004, but KTE failed to pay for the 18.6 percent stake, which at that time was valued at US$640 million.

A lawyer for East Kutai regency, Hamzah Dahlan, said KTE ended up controlling only a 5 percent stake, which was given free to East Kutai regency. The company later sold the entire 5 percent stake in KPC to PT Minang Jordanindo for $62 million.

The remaining shares that were supposed to be acquired by KTE were later purchased by PT Bumi Resources, the world’s biggest thermal coal producer.

Hamzah denied that KTE had sold its right to acquire the stake to Bumi, the jewel company of the Bakrie Group. Bumi currently controls a 70 percent stake in KPC.

In a financial report submitted to the Indonesia Stock Exchange dated Dec. 8, 2005, Bumi said KTE had surrendered its right to purchase the remaining 13.6 percent stake in KPC to Bumi.

Bumi corporate secretary Dileep Srivastava said he was unaware of the investigation into the KPC divestment.

“Obviously, I can’t say much until [we know more about it],” Srivastava said. (NOT)

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