Chevron Manager Jailed in Indonesia

Chevron Manager Jailed in Indonesia

The case has sparked concern among foreign energy companies and investors, who have battled fast-changing industry regulations and legal uncertainty in recent years.

JAKARTA -- An Indonesian anti-corruption court Thursday jailed a second employee of the local subsidiary of energy giant Chevron Corp.,  (IW 50/26)in a case that has alarmed foreign investors.

The two Indonesian employees, one of whom was sentenced Wednesday, were each jailed for two years over a project to decontaminate 28 plots of land, which prosecutors argued was a fake project and had caused losses to the state.

On Thursday the court sentenced manager Endah Rumbiyanti for "failing to carry out her obligations,, a lapse which it said unfairly benefited two contractors.

On Wednesday the same court sentenced another manager, Kukuh Kertasafari, for poor oversight of the project.

Defence lawyer Todung Mulya Lubis said after the first verdict that they would appeal to a higher anti-corruption court and international arbitration was an option.

Prosecutors from the attorney-general's office argued that the two companies which were contracted to carry out the clean-up had no qualifications or permits.

They also said the land was never contaminated in any case, and the project had cost the state millions of dollars.

Chevron, the country's biggest crude oil producer, denies the accusations and said the clean-up project had been given government approval before it began.

Another lawyer for Chevron, Maqdir Ismail, said Thursday's decision "defies logic" and the trial was intended "to punish, not to find justice".

Directors of the two contractors have already been jailed and two other Chevron employees are awaiting verdicts, with one of them expected Friday.

Lubis said the clean-up project was part of a production-sharing contract (PSC) with the government, under which breaches should not be treated criminally and should be settled out of court.

It is highly unusual for the attorney general's office to intervene in such agreements.

The case has sparked concern among foreign energy companies and investors, who have battled fast-changing industry regulations and legal uncertainty in recent years.

Analysts fear it could scare off much-need investment in the oil sector after the country slipped from being a net exporter to a net importer.

The president-director of  oil company Total E&P's Indonesian operation said the court decision was worrying for foreign companies who share profits with the country under PSCs."Under the PSC and so on, people can be criminalized and go to jail, so this is a very big concern to the industry," Elisabeth Proust said.

She said it was a misinterpretation that PSC projects could cause losses to the state, since they were funded by private investors.

"The only thing that we expect is more certainty from the government, more certainty from the legal and judicial system," Proust said.

Copyright Agence France-Presse, 2013

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