Govt court battle with Cemex looms

Govt court battle with Cemex looms
Published: 16 February 2005

The government has indicated it may continue its legal battle against Mexican cement giant Cemex SA at the international arbitration court, following a deadlock between both parties in the negotiation for an out-of-court settlement.   Cemex had earlier agreed to the government’s request for the suspension of a lawsuit scheduled for Jan. 11 to pave the way for settling the dispute out of court, with both parties agreeing not to continue with any proceedings until Feb. 28.   "There is a possibility that we may continue with the arbitration... There is currently a deadlock in the negotiations for the settlement," said Roes Aryawidjaja, the head of the government’s negotiation team, on Tuesday.   Roes said the government would try to renegotiate with Cemex over a possible extension to suspend the arbitration hearing and allow the government to come up with better settlement options.  

The government has been under pressure to resolve the dispute quickly to help restore investor confidence and avoid paying huge penalties of over US$500m.   The government previously planned to sign a memorandum of understanding with Cemex on Jan. 25 to end their four-year legal dispute when the company agreed to the government’s settlement option. However, the signing was canceled at the last minute for reasons that are still unclear. Legislator Azam Azman Natawijana of the House of Representatives’ Commission VI for industry, trade and state enterprises urged the government to proceed with the arbitration.  

He argued that the out-of-court settlement options provided by the government to Cemex contained several irregularities that might cause losses to the state and benefit certain government officials and former government officials.   "I suspect there are a number of irregularities in the out-of-court settlement options. It is better for the government to continue with the arbitration because our position is legally strong," he said. He refused to go into details of the irregularities.  

According to the Democratic Party faction lawmaker, the Commission plans to summon former Minister of Finance Bambang Subiyanto, former State Minister of State Enterprises Tanri Abeng and his deputy for privatization Herwidayatmo.  The three are considered responsible for drafting the conditional sales and purchase agreement (CSPA) between the government and Cemex in 1998 for the purchase of 25.53 percent of the shares in publicly listed Semen Gresik.   "The deal contains loopholes which have caused state losses. We want to know if the three have been involved in selling their country’s assets to foreigners for their own benefit," said Azam, adding that the Commission would urge the government to disclose the original CSPA documents to the public.