Trafalgar House to lose Indonesian contract

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THE construction company Trafalgar House is set to become the next British casualty of the fall of President Suharto, with the new Indonesian government poised to cancel a $625m joint venture involving the dictator's daughter.

Sources in the Indonesian government told The Independent yesterday that they want to find another private company to build a 59km toll road which Trafalgar House, now called Kvaerner, is constructing in West Java.

News of the latest blow to British interests in Indonesia came as details emerged of other big companies with contracts linked to family or friends of the former President Suharto. Rolls-Royce, Rio Tinto, BP, United Biscuits and the Bank of Scotland all have projects that may come under scrutiny.

Last night, Kvaerner said it hoped to salvage the toll road deal, but government sources said they were keen to scrap it. They claim that the project is behind schedule and that relations between the British company and the Ministry of Public Works have all but broken down. The project is likely to be scrutinised for evidence that it was awarded as a result of nepotistic favours granted to Trafalgar House's partner in the deal - Suharto's eldest daughter, Siti Harijanti Rukmana, better known as Tutut.

"We want to end the whole thing," a senior government source said yesterday. "The ground-breaking was one year ago, and by now they were supposed to have completed one segment. We have reminded them many times, but relations are not good."

The news comes five days after a pounds 225m contract involving Thames Water and Suharto's eldest son was suspended after allegations of nepotism.

The secretary-general of the Ministry of Public Works, Sunaryo Sumadji, said yesterday that the government will "intensify" their investigations into companies with links to Suharto relatives and cronies.

Contracts at risk, page 2