Indonesia’s Anti-Graft Body Detains Head of Energy Regulator

Indonesia’s anti-graft agency detained the head of the country’s energy regulator on bribery allegations linked to an oil company, officials said.

Rudi Rubiandini was held by the Corruption Eradication Commission late yesterday and is being questioned, Johan Budi, a spokesman at the anti-graft agency, said in an interview with Bloomberg TV Indonesia today in Jakarta, declining to provide further details. Rubiandini couldn’t immediately be reached when called twice on his mobile phone.

The anti-graft agency is seeking to tackle institutional corruption in Southeast Asia’s largest economy. The detention of Rubiandini, formerly the deputy energy minister, adds to policy uncertainty in the country’s oil and gas industry, according to Keith Loveard, head of risk analysis at Jakarta-based Concord Consulting.

“The development adds yet another twist in the troubled existence of the upstream oil and gas regulator,” Loveard said by e-mail today. “The arrest of Rubiandini also comes as concern mounts about the energy sector following the introduction of a string of nationalistic policies and questionable criminal prosecutions.”

A constitutional court ruling last year forced the government to disband independent oil and gas regulator BPMigas and instead set up SKK Migas as a task force under the energy ministry. Rubiandini was appointed head of the new agency in January, as the government sought to boost domestic oil output amid rising fuel consumption.

Legal Risks

Three employees at Chevron Corp’s local unit were convicted on corruption charges last month. Indonesia’s institutions are perceived as among the most corrupt in the world, according to Transparency International’s Global Corruption Barometer 2013, and graft scandals have damped support for President Susilo Bambang Yudhoyono’s Democrat Party before elections next year.

“We are supportive of the legal process,” Elan Biantoro, a spokesman at the oil and gas regulator, said today by telephone in Jakarta. “Currently there are no crucial issues that need to be decided by the chairman,” said Biantoro, adding anti-graft officials have sealed off Rubiandini’s office.

Anti-graft officials detained Rubiandini along with an unidentified company employee at his house in South Jakarta at 10:30 p.m., Metro TV reported, citing the agency’s spokesman Budi. The officials found $400,000 in cash when taking in Rubiandini, Budi said in the Metro TV report.

“It is indeed related to an oil company,” Budi told Bloomberg TV Indonesia.

Yudhoyono has yet to be briefed by the energy minister about Rubiandini’s detention, Firmanzah, a senior official for economic affairs at the presidential office, said today. The president will make sure that it will not affect operations at the oil and gas regulator, he said.

The government cut its oil production target for this year to 840,000 barrels a day in a revised 2013 budget in June, from an earlier estimate of 900,000 barrels. The net oil importing country spent 211.9 trillion rupiah ($20.5 billion) on fuel subsidies last year, as rising demand for imported energy products contributed to a record current-account gap in 2012.

Indonesia decided in 2008 to pull out of the Organization of Petroleum Exporting Countries as aging fields and slumping output turned the country into a net oil importer.

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