Indonesia House Speaker’s Resignation Leaves Many Questions

The speaker of Indonesia’s House of Representatives, Setya Novanto, may have resigned but the questions raised over allegations of a spectacular bribery attempt involving US mining giant Freeport McMoRan have hardly been answered.

Setya abruptly stepped down on Wednesday, Dec. 16, just as a House ethics committee was poised to hand down a guilty verdict against him. The seemingly well-orchestrated resignation led to the panel abandoning its probe and not reading the verdict.

Setya has been under fire for weeks after Sudirman Said, the Energy and Mineral Resources Minister, publicly released a recording in which Setya appeared to use the name of President Joko Widodo and that of Vice President Jusuf Kalla in requesting a bribe of 20 percent of the shares in Freeport’s Grasberg mining operation, which must be divested under the terms of Freeport’s mining contract of work.

Big doings

The affair has been called one of Indonesia’s biggest-ever scandals and Setya was joined on tape by one of the country’s wealthiest and most secretive businessmen, oil trader and deal-maker Mohamad Reza Chalid. Reza ignored a House subpoena to testify in the ethics probe and is presumed to be in hiding abroad.

The two men are heard on a recording promising to help Freeport gain a long-sought contract extension in exchange for the shares, which supposedly would be divvied up between Joko and Kalla, both of whom have denied any knowledge of Setya’s attempt. Joko angrily denounced the speaker for disgracing the country.

The speaker, from the opposition Golkar Party, has been the subject of several days of hearings in the House Ethics Council, which was voting on the matter last night with 15 of the 17 members concluding that Setya had broken the House ethics code by organizing two private meetings with Maroef Sjamsoeddin, the president director of Freeport McMoRan Indonesia, to expedite Freeport’s contract extension in exchange for the shares in the Papua-based gold and copper miner. Setya’s resignation stopped the vote and the committee seemed delighted to be able to call a halt to the proceedings.

Maroef secretly taped the meeting in June and it later found its way to Sudirman, who brought ethics charges against Setya and released the tape.

The airing of the taped kicked off a public outcry and led to a murky behind-the-scenes power struggle involving Sudirman, coordinating security minister Luhut Panjaitan and other unnamed officials. A bitter feud between Luhut, who has publicly opposed Freeport’s contract extension, and Sudirman, who has backed the mining giant’s bid, has been made public as a result of the affair. Jokowi has said little beyond enouncing the use of his name.

Setya seemed contrite during a press conference at his home on Wednesday evening, saying he would apologize to the nation. Later he added, “All [of what I did] was for the people of Indonesia.” He will retain his House seat, and Golkar won’t be forced to give up the speakership, although under House rules the party could be challenged on that point.

With the verdict swept under the rug and the House political structure left more or less intact it remains to be seen whether a promised criminal investigation by the Attorney General ‘s Office will bear fruit. The highly politicized AGO seems unlikely to want to go after someone as powerful as Reza, who has been a key behind the scenes player for many years.

We have this letter…

In October, Jokowi himself shepherded through a letter to Freeport promising an extension of the contract ahead of its expiry date in 2021. He bypassed regular channels, with only Sudirman and Freeport in the room.

Now, sources say, the promise itself may be in jeopardy due to the political fallout from the case. Freeport has said little publicly, other than Maroef, a former No. 2 at the state intelligence agency, testifying that the tape is genuine and that he made it on his own authority.

Many Indonesians, however, seem to blame Freeport for manufacturing the whole affair, saying the company tried to damage the Indonesian nation because of its desire for a contract renewal. It is unclear how Setya could have been forced to ask for 20 percent of the company under such a scenario but Indonesia is often prone to conspiracy theories to explain misbehavior and embarrassment.

Freeport wants the extension in order to raise $18 billion in capital to take Grasberg underground and extend its life as one of the world’s biggest gold and copper mines.

Skeptics about Indonesia’s system of justice fear that Sudirman also may have been damaged by the affair. Setya has filed suit against Sudirman for defamation and other alleged misdeeds. Sudirman is generally regard as one of the main reformers in the cabinet and for some Indonesians he has become a folk hero in recent weeks for exposing the sleaze.

For those who want to see Freeport continue its investment in the country, there is growing concern over the president’s lack of public decisiveness in defending the contract promise he put in place. It is widely believed that numerous entrenched interests want to get their hands on the Grasberg mine, which is perhaps the largest single foreign investment in the country. Freeport is Indonesia’s largest taxpayer.

In August, the president appeared to have overcome what appeared to be presidential lassitude by cleaning deadwood out of his cabinet, ordering a thorough review of red tape hampering foreign investment, announcing the Freeport contract and later going to Washington, DC to say he wants to throw open Indonesia’s doors to foreign investors.

But the bribery scandal and the battle between Luhut and Sudirman has seemingly exposed his inability to make tough calls. Either that or he is waiting to show his hand. “Everything is paralyzed, nobody is moving,” said an Indonesian businessman. “This has got to get sorted out.”