The Pertamina Bribery Case: R v Innospec Limited
Saturday, April 3, 2010 Mohamad Mova Al'Afghani
As you might be aware, the Indonesian Commission for the Eradication of Corruption (KPK) recently investigated the alleged bribery of former Indonesian's Pertamina (State owned oil company) top officials for delaying the enforcement of TEL-free gasoline policy and securing the TEL supply contract to Pertamina.
The bribery was allegedly conducted by Innospec subsidiary in Indonesia through a series of ad-hoc funds and financial engineering. Some of the important points in the UK's Serious Fraud Office document:
65. It is not known how many ad hoc funds there were, nor responses for one off payments, though there is reference to a number within documentation provided to the SFO by Innospec. These additional payments were variously referred to as the “Lead Defense”4 fund; “Lim WS account”5; “compensation fund”6; “extraordinary costs”7; “cumulative costs”8; “special funds”9; “promotion fund”10 or “exceptional promotional work”11; “special bonus”12; “cranes” 13 and the “Rachmat Sudibyo fund”.
66. This fund was conceived and largely operated during a period predating the Indictment. In the first instance between 2000 until his departure in August 2002, a recipient of ad hoc bribes was Rachmat Sudibyo (“Sudibyo”). The “Rachmat Sudibyo Fund” was a corrupt vehicle to pay Sudibyo, the Indonesian Director General of Oil and Gas at the Ministry of Energy and Mineral Resources. He was in post until August 2002, whereupon he was appointed Chairman of BPMigas – the newly established oil and gas authority.
69. The Special Committee retained KPMG to examine all payments made to PTSI. KPMG found two large payments, one in 2001 ($265,000) and one on 8 January 2002 ($295,150) with invoices stating that they were: “For payment all Pertamina/Migas & Lemigas Personnel (sic) travel, hotel, daily expenses overseas during the year 2001 spent in promotion of OCTEL’s products, as earlier agreed.”.
76. Innospec’s agents therefore made corrupt payments to public officials at Pertamina which were not dependent upon or related to specific orders for TEL being made. Corrupt payments were made as general sweeteners “to clear the air”, through various mechanisms including the agents’ general commission, to “buy of [sic] some Pertamina people”, to maintain or increase market share.
77. Furthermore, Innospec’s agents also requested further funds in order to make corrupt payments to a rival agent – Wisnu – who had apparently been tasked with marketing Chinese-sourced TEL to Pertamina.
83. In 2003 and 2004, Innospec’s agent, Sebastian, targeted Suroso, who became the Refinery Director of Pertamina. It is believed that this position was second only to the President or CEO of Pertamina. In effect Suroso had authority, at least until 2005, to sign and agree purchase orders on behalf of Pertamina. Even after the creation of MIGAS, individual refineries and Pertamina more generally had certain autonomy to enter into contracts with particular suppliers.
Read the full document at the SFO's web here.
The UK's Innospec had pleaded guilty to the offence. The UK's DoJ is currently carrying criminal investigation into the matter.