* Official accused of receiving more than $500,000 from firm
* Indonesia is trying to attract investment into oil sector
* Latest high profile graft scandal in Indonesia
By Fergus Jensen and Andjarsari Paramaditha
JAKARTA, Aug 14 Indonesia's anti-graft agency on
Wednesday arrested the head of the energy regulator to probe
allegations he took more than half a million dollars from an oil
firm, piling more uncertainty on energy policy in Southeast
Asia's biggest economy.
The arrest is a new blow to Indonesia's attempts to attract
more investment from international energy companies, several of
which have threatened to scale back operations due to
uncertainty about the investment environment.
The former OPEC member's oil output is declining, and the
country has faced criticism for unclear regulations and
complaints about a nationalist stance on resources.
Indonesia's Corruption Eradication Agency (KPK) caught
SKKMigas Chairman Rudi Rubiandini taking around $400,000 in a
black brief case and ownership documents for a BMW motorcycle
from two people employed by a private company, KPK officials
said. An additional $190,000 was found in the chairman's
KPK officials refused to name the private firm involved,
only giving the initials "KOPL". SKKMigas spokesman Elan
Biantoro said it was an oil company that he was not familiar
Rubiandini could not be reached for comment.
Finance Minister Chatib Basri told Reuters that while the
government was committed to zero tolerance of corruption the
case did send a "bad signal to investors."
Some oil company officials were also shocked by the news.
"This industry is already tough to deal with and it
shouldn't be weighed down by this sort of scandal," said an
official at a foreign oil firm with operations in Indonesia.
The oil and gas sector is politically crucial, accounting
for about a fifth of Indonesia's government revenue.
Indonesia was once self-sufficient in oil and gas but has
been struggling for years to attract investment to halt
declining output from a peak of around 1.6 million barrels per
day in 1995. Indonesia produced an average 831,000 bpd in the
first half this year.
LATEST HIGH-PROFILE GRAFT SCANDAL
Rubiandini was appointed in January to head SKKMigas after
the independent industry regulator BPMigas was declared
unconstitutional. Some experts say the motivation was to gain
greater control over the sector after SKKMigas was placed within
the energy ministry.
SKKMigas denied the arrest would damage Indonesia's oil
operations. The agency has existing contracts with oil majors
including BP Plc, Chevron and Exxon Mobil
"Operations will continue to run. There is no impact,"
Biantoro said. "For now, with the vacuum in the top post, there
are no crucial issues that need to be decided upon."
Energy Minister Jero Wacik said Rubiandini has been
temporarily suspended as SKKMigas chairman and would be replaced
by Vice Chairman Johanes Widjonarko.
The SKKMigas chairman is the latest high-profile government
official to be accused of corruption in Indonesia.
KPK in December named Youth and Sports Minister Andi Alfian
Mallarangeng as a corruption suspect, while senior police
official Djoko Susilo is currently on trial for money
While foreign investment continues to pour into the
resource-rich country, there are growing concerns that rampant
corruption and an incompetent bureaucracy could throttle growth
and see that investment turned away.