CORRECTED-Chevron criticises imprisonment of Indonesian contractor

Wed May 8, 2013 7:25am EDT

(Corrects headline and first paragraph saying Chevron itself would appeal)

By Fergus Jensen

JAKARTA May 8 (Reuters) - Oil firm Chevron on Wednesday criticised the sentencing of one of its Indonesian subcontractors to five years in jail for breaching environmental laws, citing irregularities in the investigation and trial. A lawyer representing the subcontractor said he would file an appeal.

"The panel of judges has not made a fair and objective review of the facts of the bioremediation project which have been presented during the trial," Chevron spokesman Kurt Glaubitz said in a statement sent to Reuters on Wednesday.

However, Indonesia's Attorney General's Office said it was also not satisfied because "the verdict was different to the indictment".

"With the court verdict last night, the prosecution finds it necessary to file an appeal," Untung Setia, a spokesman for the Attorney General's Office told Reuters, declining to comment further. "We'll see what happens."

Indonesia has faced mounting complaints from resource companies and investors over regulatory uncertainty, particularly after a court decision to dismantle its oil and gas regulator late last year, throwing into question whether it will be able to reverse declining output.

Chevron, Indonesia's largest oil producer, says the Green Planet case sets a bad precedent by undermining terms in its production-sharing contract and is among issues that could lead to a reduction of its investment in Southeast Asia's largest economy.

Indonesia has attracted substantial investment because of its fast-growing economy and political stability but institutional graft and rampant petty corruption, including in its courts, are obstacles for businesses.

Three more similar verdicts are scheduled to be heard this week and next.

The Jakarta Corruption Court handed down its verdict on Tuesday night after an eight-hour hearing in a courtroom full of Chevron supporters hoping charges against Ricksy Prematuri, the manager of Green Planet, one of the subcontractors appointed to carry out Chevron's bioremediation work, would be dropped.

Prematuri is among seven people the attorney general's office said took money for the project in a cost-recovery process for work that was allegedly not completed in accordance with environmental regulations.

One of the issues questioned was whether Chevron's contractors had a government permit to carry out the bioremediation work.

"There was no proof that the project was fictive, just allegations of an administrative breach where their permit had not been extended," Chevron defence attorney Dasril said referring to the verdict, adding that the company's permit request had been ignored by the environment ministry.

Dasril said the company had obtained permission to carry out its bioremediation project while the permit extension was being processed. "This was stipulated in a letter from the deputy environment minister."

Chevron says it has been concerned about irregularities in the legal process since the attorney general's investigation started in October 2011 and during the trial.

It said the defence team was given only four days during the trial, but prosecutors were allowed four months to call many witnesses, including one expert who it says had a conflict of interest. It also said four of the accused were detained for 62 days before formal charges were lodged.

Oil and gas production has become politically sensitive in Indonesia, with calls to nationalise company assets such as the Mahakam block operated by Total, complaints about the slow startup of the Cepu field run by ExxonMobil, and warnings from President Susilo Bambang Yudhoyono not to be too greedy. (Editing by Michael Perry)

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