Foes of Indonesian Mine Deal Threaten Joko Presidency
|Dec 5, 2015|
When it was announced on Oct. 8 that Indonesian authorities had assured US mining giant Freeport McMoRan that its Grasberg copper and gold mine contract would be extended, President Joko Widodo appeared to have gained the upper hand, thwarting forces using economic nationalism as an avenue to eventually put the mine in domestic hands.
But nearly two months on, talks between the government and Freeport have turned into a national soap opera, with damning evidence of a shakedown attempt on Freeport by a leading politician airing on national TV this week. Freeport officials rebuffed the attempt, partly because it would open the US-based enterprise to prosecution under the Foreign Corrupt Practices Act, which forbids suborning bribery.
At stake is not just the multi-billion dollar future of one of the world's biggest copper and gold-mining assets but possibly the future of President Joko Widodo's government and his credentials as a supposed reformer. The affair, with billions at stake, is being called Indonesia’s biggest political scandal ever, likely to be an exaggeration given the theft of billions during the Suharto era.
“Freeport is a thorn in many sides because it was a Suharto thing,” a western political analyst said in an interview, a hugely profitable development agreed by the late strongman, who ruled for 32 years before giving up power in 1998. “It seems to be up for grabs and is enormously valuable. Interests under the cover of so-called economic nationalism want to divide up the spoils, or at least grab the 20 percent that will be divested as part of a contract renewal.”
All Wait for Jokowi to Speak
With his own cabinet divided over the sensational Nov. 17 release of the shakedown tape by energy minister Sudirman Said, and a public hearing being held into House Speaker Setya Novanto's apparent attempt to secure shares in the Indonesian unit of the company by invoking the president’s name and that of Vice President Jusuf Kalla, insiders and now the public alike are waiting for the president to say something.
The president’s silence has caused the rumor mills to churn, with one interpretation that Jokowi is on top of the mess and will sort it out. Others believe he won’t sort it out and that he is somehow in it himself. A third is that his Javanese heritage means he will simply let the matter fester without a decision.
Although Jokowi is said to have bypassed regular channels to negotiate the extension of the Freeport contract himself, with only Sudirman in the room with him and Freeport officials, pushing aside the economic nationalists, so far he has stayed out of the purported bribery matter publicly. He has neither openly backed his reformist energy minister nor sided with his coordinating security minister Luhut Panjaitan, a close aide who has been at odds with Sudirman for months. Although Luhut’s name is mentioned on the tape several times, there is no evidence of wrongdoing on his part.
Silence kicks off Multiple Rumors
Nonetheless, to Sudirman’s contention that the president authorized charges against Setya. Luhut says the president knew nothing about Sudirman's intentions. Strangely, the president has said nothing, contributing to the sense that he is indecisive, a perception that was temporarily dispelled after a strong cabinet change in August that brought in reformers, followed by the Freeport decision and other dramatic moves.
Against that backdrop, the entire country got to listen in to the recording, made in June by local Freeport CEO Maroef Syamsudin. On the tape, made with a mobile phone, Setya seemingly asks for 20 percent of the company. With him in the room, besides Maroef, was controversial businessman Mohammad Riza Chalid, once identified as the “gasoline godfather,” the leader of the so-called Oil Mafia, which profited from monopolies in downstream oil processing and which was broken up by Jokowi when he cut subsidies for oil and gas directly after taking office.
The publication of the tape has set off a political earthquake in Indonesia in which the fault lines are undergoing dramatic change. Vice President Kalla, a Golkar member whose power base is in the Indonesian Chamber of Commerce and Industry, or KADIN, has responded with outrage over the decision to air the incriminating tape nationwide and giving the impression he backs the nationalists.
Maroef and Sudirman, both said to be quite close to Kalla, also have to contend with Luhut, who is also from Golkar. The Indonesian Democratic Party of Struggle (PDI-P), despite sponsoring Jokowi’s presidential bid, is clearly at loggerheads over the publication and over the fact that the hearings into the House of Representatives hearing into allegations of the ethics violation by Setya.
Vested Interests Go After Whistle-Blower
Despite the evidence on the tape, vested interests, among them members of the PDI-P, have mounted a stiff defense of Setya, turning the hearing into a quasi-inquisition of Maroef instead, questioning him extensively on his move to record his conversation with Setya and Riza. House ethics council member Marsiaman Saragih, a PDI-P, asked Maroef whether or not he was aware of the legality of recording a conversation in Indonesia.
Responding to the question, Maroef defended his actions, saying that he had recorded the conversation only as a way of taking notes. "[The way] I recorded it was similar to when I take a note. I also didn't hide my recording device,” Maroef said on Thursday evening. He said he was sure his conversation partners were aware that he was recording.
Setya has acknowledged asking for the shares but said he was “just joking.” Despite the evidence on the tape, he is not yet under criminal investigation by either the Indonesian National Police or the independent Corruption Eradication Commission (KPK), although that could change if the parliamentary committee finds him culpable.
If indeed the case is referred to the KPK, that raises more difficult questions, given Setya’s powerful position as speaker of the House of Representatives. The KPK, once Indonesia’s most-feared corruption watchdog, has been weakened substantially since Jokowi came to power, mostly by repeated attacks on the organization by top officials of the National Police, some said to be connected to Megawati Sukarnoputri, the leader of the PDI-P.