Indonesia, a former net oil exporter and OPEC member, has been trying for years to reverse the decline at its aging oil fields. Its annual oil output has fallen about 50% from peak levels reached in the 1990s

August 15, 2013, 1:15 PM

Indonesia’s Energy Watchdog Admits Taking Money

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By I Made Sentana and Joko Hariyanto

JAKARTA–Rudi Rubiandini, who until Wednesday was the head of Indonesia’s upstream oil and gas watchdog, has denied he is guilty of corruption but admitted to accepting money in comments to reporters after he was questioned by the country’s antigraft agency. “I didn’t commit an act of corruption, but [what I did] seems to be categorized as [accepting] gratification,” Mr. Rubiandini said to reporters in brief comments late Wednesday after he emerged from the Corruption Eradication Commission’s office and before he was transported to the agency’s jail. “There was a friend who came bringing money,” said Mr. Rubiandini, without elaborating.President Susilo Bambang Yudhoyono Wednesday stripped Mr. Rubiandini of his responsibilities as the head of SKK Migas, which regulates the oil and gas sector in Indonesia. This followedMr. Rubiandini’s detention Tuesday evening by the Corruption Eradication Commission at his residence for allegedly accepting bribes of more than $700,000. Commission officials didn’t offer details on the alleged bribes, saying only that they were related to Mr. Rubiandini’s position at SKK Migas.

The antigraft commission also detained a man who allegedly handed the money to Mr. Rubiandini, whom the agency’s officials referred to as a golf trainer. It also detained an executive from the company allegedly behind the bribes. The commission declined to disclose the names of the other two men or name the company the executive works for.

One person in the Indonesian government familiar with the investigation said the company involved was Kernel Oil, an oil-trading company with offices in Singapore and elsewhere.

Lawyer Junimart Girsang, who represents PT Kernel Oil’s commissioner, Simon Gunawan, confirmed that Mr. Gunawan was one of the three people detained by the antigraft body.  Mr. Girsang said Mr. Gunawan was arrested at his apartment on Tuesday evening, and has denied he bribed Mr. Rubiandini.

“Simon said he doesn’t know Rudi,” and there haven’t been any communications between them, Mr. Girsang told The Wall Street Journal. He added that PT Kernel, the Indonesian unit of Singapore’s Kernel, doesn’t have any business relations with SKK Migas.

The antigraft agency searched the office of Waryono Karno, the secretary general of the Energy and Mineral Resources Ministry, from late Wednesday until early Thursday, Energy and Mineral Resources Minister Jero Wacik told reporters Thursday.

Mr. Wacik declined to elaborate, but people who witnessed the search told The Wall Street Journal that antigraft investigators took several boxes of documents from Mr. Karno’s office.

The investigation of Mr. Rubiandini and other energy officials could deepen uncertainty in a once-strong oil and gas sector that has seen diminishing production even as demand has increased rapidly amid an economic boom.

Indonesia, a former net oil exporter and member of the Organization of the Petroleum Exporting Countries, has been trying for years to reverse the decline at its aging oil fields. Its annual oil output has fallen about 50% from peak levels reached in the 1990s.

Indonesia’s state-owned companies as well as international and local private-sector groups held off from investing the billions of dollars needed to find and exploit new oil fields, some analysts and industry executives say, citing in part the confusing regulatory environment in the country.