Temasek will fight case all the way

It says Indonesian panel's arguments are 'fatally flawed', and it is prepared to seek international redress

By Bryan Lee
The Straits Times, November 21, 2007


DISPUTING THE RULING: Presenting Temasek's case at yesterday's press conference were (from left) competition law expert Frank Montag, Mr Todung, Mr Israel and Mr Singh. Temasek says the Indonesian competition watchdog, KPPU, has to explain why it is blatantly contradicting previous rulings by the Indonesian government.





TEMASEK Holdings said yesterday it will go all the way to international arbitration, if need be, to contest a verdict that it broke Indonesia's anti-monopoly laws.

The Singapore investment company, which is under fire for its indirect stakes in Indonesia's top two telcos, said the country's competition watchdog, KPPU, has produced no real evidence to back its claim, only 'fatally flawed' arguments.

Temasek also said the KPPU has to explain why it is blatantly contradicting previous rulings by the Indonesian government on exactly those issues it is now finding fault with, when nothing has changed since the government approved the investments.

'We know we are right and we will fight all the way,' said Senior Counsel Davinder Singh, whom Temasek has engaged to help fight the case.

'Temasek is entitled to take this matter further under international law and reserves the right to do so,' he told a press conference.

Temasek is linked to Telkomsel and Indosat via minority stakes held by its subsidiaries - SingTel and ST Telemedia.

The KPPU on Monday ruled that the Singapore company used its control over the two telcos to fix prices in the country's mobile-phone market at the expense of consumers.

It has ordered Temasek to sell off at least one of these holdings within the next two years.

The next step for Temasek is to fight the ruling in Indonesia's courts. It will have 14 days to appeal to Jakarta's district court after the KPPU puts up the full judgment on its website.

A decision will be reached within the next 30 days, after which the losing party can file an appeal with the Supreme Court, which will also have 30 days to make its ruling.

Temasek's Indonesian lawyer Todung Mulya Lubis said all this will be completed by the middle of next year at the latest.

Should these efforts prove unsuccessful, Temasek will seek international redress, a process that can take one to three years.

Mr Singh said that while arbitration will not overturn the Indonesian court's rulings, Temasek can get compensation.

Calling it a matter of 'common sense', Temasek executive director Simon Israel said the KPPU's findings were illogical.

'The entire case is based on the premise that Temasek has majority shares in both Telkomsel and Indosat,' said Mr Israel.

'The fact is, we have no shares in either company and the KPPU has produced no evidence to support this allegation.

'We do not direct or control the investment and operational decisions of ST Telemedia or SingTel, much less those of Indosat and Telkomsel.'

He stressed: 'These companies are directed by their own independent boards of directors and management.'

Mr Singh pointed out that the issues raised by the KPPU had been debated four years ago when the Indonesian government was mulling over ST Telemedia's investment in the country.

Coming a year after SingTel bought its stake in Telkomsel, the government approved the Indosat deal, with blessings from the KPPU.

'The facts have not changed, so how could KPPU ignore those findings and reach the current conclusion?' said Mr Singh.

Mr Todung said Temasek did not receive due process in the investigation.

'Statements were made about Temasek's guilt even before it had the chance to present its case...Temasek was not given the opportunity to cross-examine any of the so-called 'evidence' used against it,' he said.

He added that Temasek was given barely a day to file its defence.