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Finance Minister Sticks to His Guns During Newmont Stalemate
Dion Bisara | May 19, 2011

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Political pressure from national and regional lawmakers will not dissuade the central government from its plan to buy a 7 percent stake in Newmont Nusa Tenggara, Finance Minister Agus Martowardojo said.

Despite coming under heavy criticism, including threats of prison, from the House of Representatives, the minister insisted the deal to purchase divested shares in the gold and copper miner would go ahead.

“There are many extractive companies that have low compliance in paying royalties and taxes. We want to make sure that this does not happen at Newmont,” Agus said on Thursday.

His comments came the day after House Commission XI, which oversees financial affairs, held a special hearing that lasted until midnight. Nusron Wahid, a Golkar Party lawmaker on the commission, intimated that Agus could be forced to resign or go to jail if the deal proceeded.

Lawmakers have insisted the purchase by the state investment agency (PIP) went against state budget laws and needed House approval. They have also publicly stated their desire for the shares to go to the government of West Nusa Tenggara (NTB), where the mine is located.

However, Agus said that the government had no intention to give the shares to the NTB administration. He pointed to its purchase of a 24 percent stake in 2009, which it carried out through Multi Daerah Bersaing, a joint venture with the Sumbawa and West Sumbawa governments and Bakrie Group’s Multicapital.

Golkar legislator Harry Azhar Azis, deputy chairman of the commission, said the government needed to change its stance or the House would summon the Supreme Audit Agency (BPK).

“We have asked the government to submit a fresh proposal about the purchase next week, or we will ask the BPK to do an investigative audit on the purchase,” Harry said.

NNT and the central government have agreed on a sale price of $246.8 million, a 10 percent discount on the initial valuation. The deal is still not finalized, though, as it still needs to clear the Energy Ministry and the Investment Coordinating Board (BKPM).

Hadiyanto, director general of state assets at the Finance Ministry, said the government had not decided on a respone to the House’s demand.

“The bottom line is we’re confident that what we’ve done was according to the law,” he said. “If an audit is inevitable, we can show the governance of this purchase.”

Lawmakers insist a 2004 law on state treasury states such transactions need House approval. Hadiyanto said the law only applied to state assets such as land and buildings, while the government had full control over the PIP’s funds.