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Bakrie's conflict of interest

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Jakarta Post - August 24, 2006

There is plenty of mud to go around in Sidoarjo, but the one party that looks set to come out of this disaster looking the dirtiest is the powerful Bakrie family.

Much of the blame for the disaster has fallen on the family, with Vice President Jusuf Kalla going so far as publicly demanding the family bear all the costs arising from the mudflow.

To its credit, the family, through Aburizal Bakrie, the coordinating minister for the people's welfare, has promised to pay for the disaster, though it remains to be seen whether it will live up to this promise.

So, just how exactly are the Bakries connected to this muddy business in Sidoarjo?

According to media reports and information from Lapindo Brantas Inc., the company that drilled the gas well from which the mud is spewing, the Bakrie family's involvement in the Sidoarjo disaster is multipronged.

The family is involved through the owner of the project, Lapindo Brantas, Inc. and through the contractor for the project, Alton International Indonesia.

Lapindo Brantas holds 50 percent ownership of the Brantas gas block in Sidoarjo, which it bought from Huffco of United States in 1996. Other shareholders are publicly listed local energy company PT Medco Energy (32 percent) and Santos Ltd of Australia (18 percent).

Lapindo itself is 100 percent owned by publicly listed oil and gas company PT Energy Mega Persada (EMP), which is 63.53 percent controlled by the Bakrie family, 3.11 percent by Rennier AR Latief, 2.18 percent by Julianto Benhayudi and 31.18 percent by the investing public.

According to Warta Ekonomi, Alton International Indonesia (AII), which won a US$24 million contract from Lapindo, has a connection with Bakrie and Rennier, who is currently a commissioner at EMP. Before serving as a commissioner, Rennier was president of EMP and chief executive officer of Lapindo.

AII is owned by Alton International Singapore (AIS), based in Singapore, and PT Medici Citra Nusantara. AIS is controlled by Singapore-based Federal International Ltd., in which Syailendra Surmansyah Bakrie and Nancy Urania Rachman Latief are shareholders.

In February, both Syailendra and Nancy increased their stakes in Federal International to 12.33 percent and 12.29 percent, respectively. Who are Syailendra and Nancy? Syailendra is the son of Indra U. Bakrie, the younger brother of Aburizal Bakrie, and Nancy is the wife of Rennier Latief.

These conflicts of interest in the Lapindo project only surfaced after the sludge began spewing from Lapindo's gas well at the end of May. Otherwise, all these cozy business relationships would have gone unnoticed, like so much mud buried deep beneath the ground.

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