Indonesia Rearrests Chevron Exec

The Indonesian Attorney General's Office is continuing its assault on multinational oil producers, rearresting an executive at Chevron Pacific Indonesia on graft charges despite the fact that the South Jakarta District Court in November ordered his release, saying there was no evidence of criminal activity.

The order to arrest Chevron's Bachtiar Abdul, which has come in for criticism by Indonesia's National Commission on Human Rights, is the latest salvo fired at Chevron and is regarded as a mystery by much of the international community, since he and other officials of the Chevron subsidiary have repeatedly been cleared by the courts and by industry regulators. The attorney general's office, considered one of the government's most corrupt institutions, ignored two court orders freeing him.

Bachtiar's arrest follows the sentencing on May 6 of Ricksy Prematury, the director of the award-winning Green Planet Indonesia (GPI) a company hired by Chevron to carry out environmental projects on its behalf in Sumatra, and another GPI official. Prematury was ordered imprisoned for five years for allegedly causing more than US$3 million in state losses on the project and his colleague was sentenced to six years.

Prematury 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.

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. Chevron, ExxonMobile and the French energy company Total, the country's biggest natural gas producer, have all raised objections with the government over continuing harassment.

The ongoing war of nerves between the Indonesian government and major multinational oil and gas companies escalated in February when ExxonMobile and Total objected to a central bank rule requiring exporters to channel all their earnings through local banks. The issue has become more acute recently given the drop in the value of the rupiah against the US dollar. A variety of regulations have been pushed through giving the government more control over energy companies. Distrust is rising over government moves.

Bachtiar was first arrested last September along with three other Chevron employees and the two GPI officials on charges that the Sumatra cleanup site was a corrupt operation designed to channel money into the employees' pockets and that the remediation plan was worthless. However, the South Jakarta court ordered their release, saying there was no evidence of criminal activity.

In addition, a spokesman for the new upstream regulator set up last year after a court said the previous regulator was unconstitutional said the arrest "will definitely disrupt exploration operations and the exploitation of oil and gas. "Upstream oil and gas workers fear they may someday be hit by a similar situation if they are criminalized when a civil case becomes a criminal case," he told Reuters.

The arrests are particularly suspicious because the evidence against the officials was principally provided by Edison Effendi, a purported bioremediation expert who testified that GPI ignored processes in neutralizing the polluted soil. However, Chevron Indonesia contested the use of Effendi and two others from the same consulting firm, pointing out that Effendi had lost 2007 and 2011 tenders to handle bioremediation projects for the company. The other two presented the exact same testimony as Effendi.

The state loss was allegedly incurred as Chevron reportedly received a cost recovery budget from the now-defunct upstream oil and gas regulator BPMigas. Earlier during the trial, prosecutors said the cost recovery budget used to pay what they called a "fictitious" bioremediation project reached US$23.36 million.

Both Chevron and SKKMigas, the new oil and gas regulator, said all costs involved in the project were borne by the company and that the state had suffered no losses.

The human rights commission on May 21 accused the Attorney General's Office of violating human rights in its handling of the case. Natalius Pigai, a commissioner, said the commission's examination of the case concluded that the attorney general was guilty of four counts of human rights violations.

The attorney general, Pigai said, failed to obtain legal certainty, prevent arbitrary arrests and detentions, deliver justice through a fair and honest legal process and secure the rights of those involved in an alleged civil case.

"All evidence of the violations are being drafted in a 400 page [report] that will be submitted to the president, the speaker of the House, House Commission III [which deals with legal affairs] and the Judicial Commission on Monday," he said. He also charged that there were 11 irregularities in the handling of the case.

For example, two pretrial verdicts which declared the detention of the three Chevron employees and the naming of Bachtiar as a suspect illegal were ignored, he said. A second irregularity was in declaring the suspects -- all from lower management or the company level -- to be guilty of a decision that was clearly not made at their level.

"If it is a large project, does it make any sense that it was [decided on] by lower management?" Natalius asked.

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.