Dirty tricks plan against ST Telemedia alleged

The Straits Times, May 5, 2007
By Azhar Ghani, Indonesia Bureau Chief


Jakarta, Russian group deny bid to wrest Indosat from STT control

JAKARTA - AN ALLEGED 'dirty tricks' campaign to oust Temasek-owned ST Telemedia from its controlling stake in Indonesian telecommunications company Indosat has Jakarta abuzz, with several top leaders coming out to deny their involvement.

Details of the plan have emerged from several sources over the past two weeks, with Indonesian newspaper Koran Tempo naming Russian conglomerate Alfa Group as the main mover.

The group is said to be interested in the 42 per cent stake in Indosat held by ST Telemedia's majority-owned Asia Mobile. It is alleged to have aggressively courted high-level government and political leaders.

Allegations have been made of large sums of money exchanging hands and the promise of more money after the planned ouster succeeds.

Yesterday's Koran Tempo quoted State Minister for State-owned Enterprises Sugiharto denying that he had met Altimo, Alfa's telco arm, to discuss plans to oust ST Telemedia from Indosat.

He told the paper: 'I've not been to Russia and have not spoken to the Russians...I've already said I'll leave it to market forces.'

Mr Sugiharto's office had been named as a facilitator of the plan to oust ST Telemedia.

Documents obtained by The Straits Times, which are believed to be copies of an internal presentation by executives of the Russian company, also indicated that other top government leaders were involved in the plan.

Similar documents were cited in an earlier report, filed last November by Russian newspaper Tribuna, which referred to an internal document belonging to Alfa named 'Project Indosat'.

The report said that the documents mapped out a multi-pronged plan to oust ST Telemedia from Indosat by roping in Indonesian politicians and bureaucrats.

In recent weeks, new information from Indonesian sources has emerged, giving details of the implementation of those plans.

On Monday, a local non-government business think-tank, the Institute for Analysis of Information and Technology Businesses (IA-ITB), issued a press release on the alleged plan.

It claimed that several Indonesian lawmakers have received Rp10 billion (S$1.7 million) each to lobby for Indonesia's competition watchdog, KPPU, to press ahead with investigations into complaints against Temasek for alleged monopolistic practices in the local cellphone market.

The complaints against Temasek were filed last October by the Federation of State-Owned Enterprises Employees' Union (FSP). The union had said that Temasek violated Indonesia's anti-monopoly law by dominating the market and had practised price-fixing.

Besides ST Telemedia's shares in Indosat, Temasek also has stake in Telkomsel, the country's biggest operator, through SingTel's 35 per cent ownership of the company.

IA-ITB also made public the transcript of a parliamentary hearing on March 20 in which some legislators had lobbied KPPU officials for its investigations to continue.

KPPU head Mohamed Iqbal has denied the IA-ITB allegations.

Sources in the Indonesian government told The Straits Times that the leadership is aware of the alleged 'Project Indosat' and insisted that the plan does not have the support of the top politicians and officials alluded to in the leaked document.

Altimo's representative in Indonesia, Mr Soeharto, has also denied that the company would resort to such dirty tactics.

'We're always looking for investment opportunities and Indosat is certainly a possibility,' he told The Straits Times.

'But we wouldn't do anything unethical.'

Reacting to these developments, ST Telemedia said it viewed with grave concern the fresh allegations.

'ST Telemedia cannot explain the continuous media pressure mounted on us in the past few months, which had also resulted in frivolous and unsubstantiated accusations.

'Should there be any truth in the Koran Tempo report, we will be deeply disappointed. More importantly, the reported actions will severely diminish and erode investor confidence in the country.'