Indonesia energy regulator chief held over graft claims

JAKARTA, Indonesia - The head of Indonesia's main energy regulator has been detained over bribery allegations, an official said Wednesday, in a move that could hurt investor sentiment in Southeast Asia's top economy.

Rudi Rubiandini was detained at his house in the capital Jakarta late Tuesday with more than $400,000 in cash as he met with two men, according to anti-graft agency the Corruption Eradication Commission (KPK).

The arrest comes as foreign companies are battling fast-changing industry regulations and legal uncertainty in the Indonesian energy sector.

Last month three employees of a local subsidiary of US energy giant Chevron were jailed over graft allegations.

Rubiandini, head of upstream oil and gas regulator SKK Migas, was now being questioned, said KPK spokesman Johan Budi.

"He has not officially been named a suspect yet," he told AFP, without giving further details of the allegations against him.

The two other men with him in his house were also arrested, while a third was detained at a Jakarta apartment, said the spokesman.

Budi said at least $400,000 was seized from Rubiandini's house but he did not know the final amount as officials were still counting the money.

A BMW motorbike was also seized and his driver and two security guards were detained, said Budi.

As the upstream oil and gas regulator, SKK Migas deals with the search, recovery and production of crude oil and natural gas.

SKK Migas insisted in a statement on its website that operations were running normally despite the arrest.

However Martin Hughes, director of consultancy Business Risk Indonesia, warned: "In the short term, things might be strained and tumultuous in the department.

"We might see delays, like in the releasing of permits for example, and that might cause nervousness among investors." But he added that investors might view it positively in the long term: "It's good to see the KPK going after a few of the more important people." Indonesia is one of the world's most corrupt countries.

Transparency International last year ranked the country 118th out of 176 countries on its annual index, which rates the least to the most corrupt states.