November 9, 2015 / 11:22 AM / 4 years ago

UPDATE 1-Indonesia's audit of Petral trading unit reveals fraud -Pertamina CEO

* Pertamina paid higher oil, gas prices due to “third parties”

* Third parties rigged tenders, leaked prices -energy minister

* If audit shows wrongdoing, evidence should be given to corruption commission -Petral official (Adds detail, quotes, comment from Petral official)

By Wilda Asmarini

JAKARTA, Nov 9 (Reuters) - An investigative audit of Pertamina’s oil trading arm has revealed clear signs of fraud, CEO of the state-owned energy company said on Monday, amid an ongoing push to reform Indonesia’s oil sector.

Pertamina is in the process of dismantling its trading arm, Petral, which was widely suspected of being a vehicle for graft. The administration of President Joko Widodo hopes a cleanup of Indonesia’s oil and gas sector will improve investment in Southeast Asia’s biggest crude producer after a series of scandals.

The Petral audit - conducted by Australian forensic specialist KordaMentha - showed intervention by third parties resulted in Pertamina paying higher prices for fuel and crude imports, CEO Dwi Soetjipto told reporters, without naming any specific countries or companies.

The audit also showed that traded volumes had been pre-arranged to limit competition, and that preference had been given to national oil companies, Soetjipto said.

“This needs a legal analysis for what steps must be taken next,” he said. The audit, which covered Petral’s operations from January 2012 until May this year, did not show how much had been lost during this period, he said.

At the time that the disbanding of Petral was announced in May, Petral officials denied any wrongdoing.

Simson Panjaitan, head of finance and general affairs at Petral, said on Monday he couldn’t comment on the findings of the audit because he hadn’t seen the report.

“We are supposed to get a fair treatment. Let’s see whether what has been reported in the media is correct. Many employees here will suffer because of this accusation if there is no evidence or any follow up,” he told Reuters.

Panjaitan said if there were clear signs of corruption that the evidence from KordaMentha should be handed over to Indonesia’s Corruption Eradication Commission (KPK).

He said there were currently 45 employees with Petral, including 12 or 13 from Pertamina.

Pertamina finance director Arief Budiman said the state-owned parent was continuing to liquidate Petral’s $483 million of assets and verifying $46.6 million in payment claims, mostly from its Singapore-based subsidiary Pertamina Energy Services.

The claims related to demurrage, shipments and other trade services, Budiman said, adding that the process of winding down Petral may continue beyond an earlier targeted completion date of April 2016.

On Sunday, Energy Minister Sudirman Said said third parties had intervened in Petral’s business by rigging tenders, leaking Petral’s price calculations, and using its equipment.

The activity of the unnamed third parties had caused discounts on oil purchases to shrink to around 30 cents from up to $1.50 per barrel, the energy minister said.

“The discounts that used to be held hostage by these third parties have now (gone back) to Pertamina.”

Pertamina’s new vehicle for oil purchasing, the Integrated Supply Chain, has yielded more competitive pricing, with efficiency savings of $103 million at the end of the third quarter, a company statement said on Monday.

Pertamina took over Petral’s contracts in February, with the trading arm’s last contracts wound up in June. (Additional reporting by Agus Beo Da Costa and Fergus Jensen; Writing by Fergus Jensen; Editing by Tom Hogue)

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