ICW Files Graft Report on Newmont Sale

By webadmin on 07:01 pm May 16, 2012
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Rizky Amelia & Novianti Setuningsih

The sale of a 24 percent stake in gold miner Newmont Nusa Tenggara to local administrations in West Nusa Tenggara violated the law and has caused billions of rupiah in state losses, a corruption watchdog says.

Indonesia Corruption Watch has urged the Corruption Eradication Commission (KPK) to investigate the sale of shares to West Nusa Tenggara province, Sumbawa district and West Sumbawa district.

“The KPK must question the governors and district heads because the purchase has violated the law,” Firdaus Ilyas of ICW said after filing a report with the antigraft body last Wednesday.

The first violation concerns how the local administrations bought the shares, he said. They made the purchase through their consortium company, Daerah Maju Bersaing, with financial assistance from the Bakrie Group’s Multi Capital.

However, he said this consortium formed without the required approval from regional councils at the district and provincial levels.

“The establishment of DMB has no legal basis because it was not backed up with a bylaw,” he said, adding that the regional councils had not approved the initial investment of Rp 50 million ($5,400).

The second violation involves the distribution of dividends for the shares, he said. ICW calculated that the two districts and the province should have received $47.2 million in dividends for 2010 and 2011.

“However, the regions only received $7.3 million, so we’ve questioned where the remaining $39.9 million went,” he said.

ICW’s report comes after a local government official raised concerns.

“It [the share sale] is tainted with problems,” Fitra Rino of the Sumbawa district council said while visiting Jakarta last week, demanding an audit on the sale.

The dividend was not given to DMB, he added, but to Bumi Resources, a mining company owned by the Bakrie Group.

“This is a clear violation of the regulations,” he said.

Fitra also alleged that the shares are being used as collateral for the Bakrie Group’s loan from Credit Suisse in Singapore.

Newmont is required by law to divest 51 percent of its shares to local entities.

Before the divestment program, US-based Newmont Mining Corporation controlled 80 percent of Newmont Nusa Tenggara’s shares. The remaining shares belonged to Pukuafu Indah, which is owned by Merukh Enterprises, a conglomerate in the mining sector.

After the 24 percent stake deal, Newmont owns 56 percent.

The central government plans to buy the remaining divestment allocation of 7 percent. It allocated $246.8 million for the purchase in 2010, but the transaction has been delayed due to a legal dispute.

While the House of Representatives and the Supreme Audit Agency (BPK) say the government needs approval from lawmakers before making the purchase, the government claims it can proceed without their consent.

The Constitutional Court is currently handling the case.