East Kutai, East Kalimantan. East Kutai district head Isran Noor says that he is confident his administration will be able to ride out a $2 billion lawsuit over revoked mining permits.
“I am certain that we have a 100 percent chance of winning,” Isran said on Thursday. “That’s because we won an earlier suit by the Ridlatama Group at the provincial PTUN [State Administrative Court], the Jakarta PTUN and the Supreme Court. This is a non-issue for us, but it’s being made into a big issue.”
Ridlatama, a local company, had been awarded mining permits for four concessions in East Kutai between 2006 and 2008. UK-based Churchill Mining later acquired a 75 percent stake in the company and announced that it had discovered coal reserves of 2.73 billion metric tons in the four concessions.
In 2010, Isran revoked the permits on the grounds that they had been falsely obtained and that the concessions allegedly overlapped with a forest conservation area.
In response, Churchill has accused the authorities of seizing its assets without proper compensation and taken its case to the International Center for Settlement of Investment Disputes in Washington.
Isran insists that he had a strong basis for revoking the permits, citing a 2008 report by the Supreme Audit Agency (BPK) that the signature of the district head at the time, Awang Farouk Ishak, had been forged onto the permits. Awang is now the East Kalimantan governor.
The district chief claimed that in addition to revoking the permits, he had also wanted to pursue criminal charges for the forgery, but he stopped short of that because “the punishment would have been too harsh.”
“The perpetrators could have gotten the death sentence, and I didn’t have the heart to go through with it,” he said.
He added that his administration had the full support of the provincial and central governments in facing Churchill’s lawsuit, and that he could call Awang to testify on the matter.
“We’re ready to face this litigation because we believe we’ve been right all along,” Isran said. “All investors are welcome in East Kalimantan, as long as they follow the rules. If they don’t, we won’t serve them.”
Wijaya Rahman, the head of the East Kutai mining office, previously said that Churchill had a weak case against the administration because it had never actually invested in the district.
He said Churchill should be directing its suit toward Ridlatama because the latter, when acquired by the British company, had concealed the fact that it had obtained the permits illegally.
Wijaya also argued that the permits that were revoked were mining permits, or IUPs, which foreign companies are not allowed to hold. Coal permits for foreign companies are classified as coal mining agreements, or PKP2B.