Subject: [cwj 22] Marubeni responds to political favors allegations
From: Amit Srivastava <>
Date: Wed, 24 May 2000 11:42:52 -0700
Seq: 22

Wednesday, May 24 1:44 PM SGT 

Japanese trader furious over Wall Street Journal allegations

TOKYO, May 24 (AFP) - 

Japanese trading house Marubeni Corp. reacted with fury to a newspaper
report Wednesday that alleged it received political favours in a crucial
Indonesian debt-restructuring deal.

The company dismissed the Asian Wall Street Journal's charge that the deal
was the result of political pressure on President Abdurrahman Wahid from
Japan, Indonesia's biggest aid donor and creditor. 

"The article is completely inaccurate," Marubeni spokesman Kazunori Fukuda
told AFP. "It is not even worth our comment." 

The newspaper said Wahid was under fire over his approval of a rescue plan
for PT Chandra Asri, a debt-ridden petrochemical joint venture between
Marubeni, the Indonesian state and two other Japanese firms.

The International Monetary Fund and key aides were unhappy over allegedly
preferential terms granted to Marubeni, the article said.

Marubeni said on May 10 it had agreed to a 100-million-dollar swap of loans
for shares in Chandra Asri, taking the total owed it by the petrochemical
venture down to around 600 million dollars. 

The Indonesian government also planned to convert into equity its loans of
469 million dollars to Chandra Asri, Marubeni said.

The trader's outstanding loans to the firm would be repaid over nine years
at an interest rate 2.5 percentage points over the London interbank offered
rate, the Asian Wall Street Journal said.

The restructuring left the Indonesian Bank Restructuring Agency saddled
with 80 percent equity in Chandra Asri, it said. 

The rescue plan had left the agency "with what many view as an unattractive
asset and the added burden of paying back the petrochemical company's debts
to Marubeni," the article said.

"According to people familiar with the negotiations, Mr Wahid's decision to
back the deal was influenced by his wish to remain on good terms with
Japan, which is by far the largest bilateral lender to Indonesia." 

But the Marubeni spokesman angrily dismissed the allegation that the deal
was the result of back-room political manoeuvring.

"The agreement was fair and there was no pressure at all from the Japanese
government behind the deal," Fukuda said. 

"We are not even going to bother responding (formally) to the article or to
take action."

Marubeni has cut its group net profit forecast to two billion yenmillion
dollars) for the year to March 31, partly due to its involvement in the
Indonesian venture.

Chandra Asri is capitalised at 1.05 billion dollars and operates a plant in
West Java that can produce up to 510,000 tonnes of ethylene a year.

The Indonesian government will negotiate to sell all of its stake in
Chandra Asri to the US-British oil major BP Amoco, Japan's Nihon Keizai
Shimbun business daily said earlier this month.

Options under consideration included asking one of the oil majors to become
a partner in the venture, Marubeni said in response.

FAIR USE NOTICE. This document contains copyrighted material whose use has
not been specifically authorized by the copyright owner. Corporate Watch in
Japanese is making this article available in our efforts to advance
understanding of ecological sustainability, human rights, economic
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'fair use' of the copyrighted material as provided for in section 107 of
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from the copyright owner.

Amit Srivastava
International Programs Coordinator
Transnational Resource and Action Center (TRAC)/ Corporate Watch
P.O. Box 29344, San Francisco, CA 94129, USA
Tel: 1 415 561 6472  Fax: 1 415 561 6493
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