BPK to Audit Freeport
Monday, 24 April, 2006 | 16:37 WIB

TEMPO Interactive, Jakarta: The Supreme Audit Agency (BPK) will audit PT Freeport Indonesia.
The audit results will form the basis for calculating the sharing out of proceeds and royalties from of this mining company in Papua.

The results will also prove whether or not Freeport's production reports have been properly delivered.

BPK Head Anwar Nasution said that there were suspicions as regards Freeport and that the sharing out of proceeds between the foreign investor and Indonesia has not been properly balanced.

This situation would make the government's efforts to improve the investment climate more difficult.
That is why Anwar said last week, “This audit is important so that there is no more suspicion (as regards Freeport).”

Baharuddin Aritonang, a BPK member, said that the House of Representatives (DPR) had requested Freeport be audited due to revenue-sharing differences in Freeport's reports to the government and the government's revenue reports.

“Information from cabinet meetings show that there is a US$304 million difference,” said Baharuddin, on Saturday (22/4).

Sutan Batoegana, Deputy Chief of the Mining Commission, said the audit is aimed to find out exactly where Freeport's revenues go.

“Why is this mining company so rich while the people in Papua are so poor,” he said.

However, the audit is the final step once the Freeport investigation by the special committee is finished.

According to Faisal Basri, an economic observer, the work contract between the government and Freeport being extended without raising gold royalties and income tax certainly decreases state revenues.

The BPK audit can be the access to revise the contract.

“If corruption is proved, the work contract can be cancelled. Because anything that is against the law is not valid. They will also face penalties in the USA.”

Freeport spokesperson, Sidharta Moersjid, stated that the company does not object to being audited by BPK.

However, he denied that there was a deficit amounting to US$304 million.

“There is no deficit. It is just a matter of time difference,” he said.

He explained that state’s books were balanced at the end of December, while tax payments were not until the next March.

According to Sidharta, during the work contract, from 1992 to 2005, the Indonesian government—which owns 9.36 percent of Freeport Indonesia's shares—has received US$3.9 billion in the form of taxes, royalties, dividends, and retribution, plus US$400 million for Papua social development.

Last year Freeport paid US$1.2 billion into government coffers and US$64 million for social development.

Agus Supriyanto and Aqida