Opinion
21-MC-00098 (TPG).
May 5, 2006
OPINION
Familiarity with the background will be assumed. This opinion will deal with certain issues, without full explanation of such background.
On March 8, 2006 the Court ordered Pertamina to disclose the total amount of Kakap Funds that had been paid to Pertamina since January 1, 2003. Moreover, the Court ordered Pertamina to submit
all documents and information relied upon by Pertamina, BP Migas, the Government of Indonesia, ConocoPhillips and/or any of their respective affiliates, agents, or employees in calculating the figure. . . .
By letter dated March 31, 2006, Shearman Sterling, counsel for Pertamina, provided figures purporting to constitute the amount of Kakap Funds. These figures totaled $25,379,178.78.
However, in response to the directive regarding documents and information backing up the figure, Shearman Sterling basically provided nothing. All that was provided was a one-page chart containing the figures and a covering letter from the Head of Government Executive Agency for Upstream Oil and Gas Business Activities Acting Head Division of Financial Operation, addressed to Pertamina, forwarding a "Financial Quarterly Report." The letter essentially contains no information, nor has the Financial Quarterly Report been produced by Shearman Sterling.
KBC requests that the $25,379,178.78 be paid over in partial satisfaction of the outstanding judgment. KBC also objects to the failure to comply with the order regarding production of back-up documents and information.
In response, Pertamina, through its counsel, asserts that turnover of the funds should be deferred while Pertamina is making claims in courts in Singapore and Hong Kong that there was fraud by KBC in connection with the underlying arbitration proceedings.
On the issues raised, KBC is entirely correct. There is a valid federal judgment, upon which KBC is legally entitled to recover. The funds are, without question, subject to being applied in payment of that judgment. There is absolutely no basis for any objection to the turnover request, and the Court will sign an appropriate order to this effect.
As to the production of back-up documents and other information, there has been a complete failure of compliance by both Pertamina and Shearman Sterling. Shearman Sterling attempts to excuse this by saying that the information is in the custody of an entity called BP Migas, a separate company not controlled by Pertamina. However, it is impossible to believe that Pertamina does not have documents and other information accounting for the large amounts of money owed to it and showing how those amounts were calculated. Even as to BP Migas (which was specifically named in the March 8 order), there is clearly a sufficient relationship with Pertamina so that Pertamina, and BP Migas should be able to share relevant materials and probably do so in the course of business. In response to the order, Shearman Sterling had an obligation to use its best efforts to obtain the documents and information from BP Migas, as well as Pertamina. There is no indication that Shearman Sterling has done any such thing.
The Court now renews its direction that the portion of the March 8, 2006 order pertaining to documents and information must be complied with. Shearman Sterling is directed to submit an affidavit to the Court and to counsel for KBC every two weeks beginning May 19, 2006 describing its efforts and progress with respect to compliance with the March 8 order. This requirement will continue until the production is complete.
On the question of sanctions, it would not be desirable to add to the existing motion. However, KBC is free to make an additional motion, if there is a basis for doing so.
SO ORDERED.