JAKARTA - THE Supreme Court has thrown out a lawsuit against the government over the privatisation of state-owned telecommunication company Indosat, in which Singapore's Temasek Holdings has a substantial stake.
The suit was first filed over three years ago by a group of nationalist politicians and academics against the Indonesian government, Temasek subsidiary ST Telemedia, and Indonesia Communication Limited, a Mauritius-based company.
The plaintiffs argued that the December 2002 privatisation of the state-owned company, which they said was a strategic state asset, violated the Constitution.But the court has ruled that the sale was legal.And it said that not only did the plaintiffs fail to prove that the privatisation was against the public interest, they also did not prove that they were acting for the majority of the Indonesian public, whom they claimed were against the transaction.
The Supreme Court ruled on the suit late last year but released its judgment only recently.Supreme Court judge Djoko Sarwoko told The Straits Times that the panel of three judges ruled that Indosat's privatisation was carried out according to law.Temasek bought 41.9 per cent of the shares in Indosat, the country's second-largest telecommunication operator, as part of a wider privatisation programme under the Megawati administration.The Indonesian government retained 14.5 per cent of Indosat shares while the rest were held by private investors, mainly Indonesians.
Judge Djoko said that although Temasek had a substantial stake, Indosat could not be said to be fully under 'foreign control'.He added that, in accordance with the law, foreign ownership in Indosat 'does not exceed 85 per cent'. He also said that nullifying the deal would damage Indonesia's reputation as a country that welcomes foreign investment.'The international community's confidence in the security of foreign investment here would be undermined and this would affect Indonesian public interest,' he said.The release of the judgment marked the final chapter in the legal proceedings taken by the group, which had opposed the privatisation of Indosat from the start.The plaintiffs first filed the suit in the Jakarta Lower Court in November 2003. After it was rejected, they filed an appeal in the High Court in January 2004. When this was also dismissed, they appealed to the Supreme Court in July 2005.
Meanwhile, one group which has been paying close attention to the saga is an Indonesian labour union which wants the government to buy back the telco. It is also planning to file a class-action suit against Temasek and Indosat over alleged monopolistic practices.
Federation of StateOwned Enterprises Employees Union chairman Arief Poyuono said his union was studying the judgment.'We are gathering more evidence to strengthen our case,' he said.'The planned lawsuit will be based on claims that Temasek Holdings was involved in price-fixing in the mobile phone business and other monopolistic practices, and that the acquisition of Indosat shares was not done according to proper business practices,' he added without elaborating.