INDONESIA: Mining Company Paid Military, General Says

A senior Indonesian general has admitted that the military received massive payments from a U.S. mining company for providing security at a gold and copper mine in the remote eastern province of Papua.
Publisher Name: 
Associated Press

JAKARTA -- A senior Indonesian general has admitted that the military received massive payments from a U.S. mining company for providing security at a gold and copper mine in the remote eastern province of Papua, a newspaper here reported Thursday.

Major General Mahidin Simbolon said he did not receive any of the money, but said it had been paid to battalion commanders based in the mountainous province and was used to supply their units and to pay for expenses including transport, clothing, meals and medicines, according to The Jakarta Post.

His comments came in response to an article published in The New York Times and the International Herald Tribune detailing how Freeport-McMoRan Copper and Gold, based in New Orleans, paid large sums of money directly to military commanders in the area. Simbolon did not say how much money he accepted on behalf of the military, but the newspaper said Freeport-McMoRan had paid local commanders at least $20 million since 1998.

Last year, the international watchdog group Global Witness alleged that Simbolon personally received $247,705 from Freeport-McMoRan from 2001 to 2003.

International surveys regularly rank Indonesia as among the most corrupt countries in the world. Simbolon's remarks will do little to raise confidence in the army - considered one of the most graft-ridden Indonesian institutions - or in the government's pledge to eradicate official corruption.

The revelations will also show the challenges facing the government's attempt to bring the politically powerful armed forces under civilian command following the overthrowing of the 32-year military dictatorship of Suharto in 1998. Only one-third of the financing for the Indonesian armed forces comes from the government budget. The rest is collected from nontransparent sources such as "protection payments," allowing the military to operate independently of the government's financial controls.

"We've been deployed to difficult areas, don't we deserve better supplies?" Simbolon, a former commander of the regional military headquarters in West Papua and currently the army's inspector general, told The Jakarta Post.

In filings to the U.S. Securities and Exchange Commission, Freeport-McMoRan reported payments totaling millions of dollars annually to the Indonesian security forces. It said these were included in its contract covering operations at the giant Grasberg copper and gold mine on Papua, the Indonesian half of New Guinea island.

The New York Times articles reported that there was no such language in the contract. It further reported that Marsillam Simanjuntak, a former justice minister and attorney general, said that it was a violation of Indonesian law for soldiers or police officers to accept payments from a company.

When asked about the payoff allegations, the top Indonesian military commander, General Endriartono Sutarto, would only say, "Please ask Freeport, not me."

A Freeport-McMoRan spokesman in Jakarta said the only company official who could comment on the matter was busy in West Papua.

Investment chief detained

Investigators from the Indonesian anti-corruption commission have detained the government's former investment chief, his lawyer said on Thursday, Reuters reported from Jakarta.

Theo Toemion is the latest high-profile figure to be detained under an anti-corruption campaign initiated by the Indonesian president, Susilo Bambang Yudhoyono, when he took office in October 2004. Yudhoyono has vowed to crack down on graft in Indonesia.

The lawyer, Sugeng Teguh Santoso, said Toemion was detained late on Wednesday over an investigation into funds used by the Investment Coordinating Board to promote Indonesia to foreign businessmen.

"From Theo's point of view, he did not engage in any corrupt act," Santoso said.

An official from the commission, Tumpak Panggabean, told reporters late on Wednesday that Toemion was being investigated because of irregularities over a project linked to investment promotion from 2003-04 that was awarded to a local firm without competitive bidding.

Santoso said his client had no time to organize bidding because of the tight schedule he was given for the project.

AMP Section Name:Natural Resources
  • 185 Corruption