Indonesian Government Withdraws Fraud Claims Against Churchill Mining

LONDON ( Alliance News ) - Churchill Mining PLC Thursday said it has filed its formal response to the International Centre for Settlement of Investment Disputes in the US in relation to its arbitration case against the Republic of Indonesia government which has taken a surprise turn.

Churchill Mining is currently in dispute with Indonesia about getting compensation for the revocation of mining licenses relating to the East Kutai coal project in East Kalimantan , in which it has a 75% interest. The government was claiming Churchill had obtained the licences through document forgery, but on Thursday withdrew this claim as the case continues.

That saw Churchill shares rise 37.1% to 32.90 pence per share on Thursday morning.

The Indonesian government had claimed the licenses should be revoked due to document forgery, something Churchill has denied from the start. On Thursday, Churchill said it has submitted its formal response to the claims which is accompanied with witness statements and additional information discovered when a Churchill-employed forensic document expert analysed the supposedly forged documents.

"The company and its solicitors, Clifford Chance LLP , have argued that the evidence contradicting Indonesia's dismissal application is overwhelming," said Churchill.

The company said the Indonesian government has claimed the licenses were rejected at an early stage, but said it has located final drafts for two of the Ridlatama licences which contradicts the government's claim. Churchill has also said it has found four licenses recorded in the register book of the Legal Section of East Kutai, which the government had claimed were "non-existent".

The main claim of forgery is also being argued by Churchill, which said the irregularities that suggest the documents have been forged appear on several other successful mining decrees in Indonesia .

Churchill said that the accounts of the Indonesian government's key witnesses are "inaccurate in critical aspects," and said it has conclusive evidence. Some documents concerning the licenses also bare the signature of of the government's witnesses, who denied even knowing about the licenses.

"Based on the evidence described above, the company and its solicitors have argued that this point (of document forgery) is moot, but the company has nonetheless addressed this issue in its Reply Memorial in accordance with the Tribunal's direction," it said in a statement.

In a surprise twist, Churchill Thursday said the Indonesian government "no longer alleges that Churchill participated in the alleged scheme to defraud the State. Indonesia's position now is that Churchill's former Indonesian business partners, the Ridlatama Group , were the sole perpetrators of the allegedly fraudulent scheme".

Despite the withdrawal, the case continues and will re-adjourn on July 9 , when witnesses will be cross-examined and there will be a hearing on the document authenticity.

"We are pleased that Indonesia is no longer alleging that Churchill participated in any scheme to defraud the State. The results of the production of documents by Indonesia reinforces our view that there is no substance to the fraud and forgery allegations made by the Republic of Indonesia and we look forward to having this issue dealt with so we can move ahead with having our claims determined." said Chairman David Quinlivan .