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Indonesia's first family of
corruption
By Bill Guerin
JAKARTA - Despite the thoroughgoing political
disgrace that the Suharto family has seemingly endured
since Indonesia's political and financial bubbles burst
in 1998, his avaricious children seem to have endured
their downfall rather well. At least three remain locked
into a stream of profits from the remnants of
enterprises in place before the collapse.
The
three, Bambang Trihatmojo, Siti "Tutut" Hardijanti
Rukmana, and Hutomo "Tommy" Mandala Putra, had massive
interlocking billion-dollar empires in property,
banking, industry, telecommunications, media and
transport. Although swaths of their empires were handed
over to the Indonesian Bank Restructuring Agency (IBRA)
and they are rarely seen in public - especially Tommy,
who is in prison - they have survived handily.
Nor are the Suharto children alone. In fact,
Indonesia remains one of most corrupt countries in the
world, according to the Berlin-based Transparency
International's latest index of perceived corruption
levels, which was released early this month (see Corruption, human rights: The usual
suspects, October 17). In fact, analysts say, the
problem has actually gotten worse since Suharto's
downfall, with splinter political parties out to get
what they can and the administration of President
Megawati Sukarnoputri demonstrating no political will to
combat the problem. As an example, parliamentary Speaker
Akbar Tanjung remains free, despite being convicted of
embezzling Rp40 billion (US$4.7 million) in state funds
that were supposed to have been used to buy food for the
poor.
The ability of the Suharto family to
continue to operate with impunity is cited as evidence
of that lack of political will. Today, for instance,
Tommy is widely believed to be running the remnants of
his Humpuss business empire from prison, where he was
sent for the murder of Supreme Court judge Syafiuddin
Kartamasamita. Tutut, the most visible of the three,
owns at least a Bali hotel and toll roads in the
Philippines. Bambang still holds a major interest in his
publicly traded company Bimantara Citra.
A
fourth sibling, Sigit, one of the least visible of the
Suharto offspring, was Tommy's partner in Humpuss and
still holds 40 percent of the shares. Suharto's middle
daughter, Siti Titi Hediati Harijadi (Titiek), now 43,
owned a conglomerate, Maharani Paramita, with interests
in property, telecoms, finance and forestry. Little is
heard now about the company or the lady herself, who was
often in the public eye because of her marriage to
Major-General Prabowo Subianto, the infamous commander
of the strategic reserves. She is a partner of Prabowo's
billionaire elder brother Hashim Djojohadikusumo in the
$2.5 billion Paiton power project but no corruption
allegations have been made against her.
Suharto's youngest daughter, Siti Hutami Endang
Adyninsih (nicknamed Mamiek), 39, had significant
interests in oil-palm plantations, mobile
telecommunications, land reclamation and aircraft
leasing but again, little is heard of her these days.
Tommy is the only one of Suharto's children to
be tried and convicted, for graft. If he hadn't taken
vengeance on judge Syafiuddin for his original graft
conviction, he might well have escaped jail time. The
chances of any of the other five following in his
footsteps remain slim despite the fact that a House of
Representatives' special committee of inquiry into
corruption at Pertamina, established in September 2001,
demanded that several of Suharto's children, cronies and
former ministers be arrested for their roles in graft
cases involving the company.
At the time of the
fall, analysts posited that the family's businesses were
largely based on short-term rent-seeking arrangements,
and most of them, as well as having borrowed heavily,
actually owned no assets per se. They were involved in
television and radio networks, banks, chemical
factories, pharmaceutical companies, shopping malls,
hotels, paper and pulp mills, shipping lines and taxi
companies and were commonly thought to have very little
business acumen beyond that which was coincidentally
bestowed by their father's power. Estimates of the net
worth of the Suharto family ranged from $8 billion to
$30 billion prior to 1998 as they set up "monopolies"
that were nothing more than a cost of doing business to
the multinationals and local entrepreneurs wishing to
set up in the country.
Tommy's prison
empire
Tommy, last year sentenced to 15 years for
Syafiuddin's assassination, is locked in Nusakambangan
Prison away from the public eye, but he still retains
his original 60 percent of Humpuss, the empire he
founded with $100,000 of capital in 1984. Within 10
weeks of the startup, the 22-year-old, with only a
high-school education, had made Humpuss into a business
corporation with 20 subsidiaries. By 1985 Tommy had
already bought the state-owned oil and gas company
Pertamina subsidiary Perta Oil Marketing (Perta), thus
becoming a crude-oil broker for Pertamina. Perta was
later closed down by the government, having allegedly
milked Pertamina of almost $1 million a month.
Humpuss quickly mushroomed into a major concern,
turning over $500 million a year by 1994. At the end of
1998 Tommy resigned from the board of directors of
Humpuss and became president commissioner. Humpuss's
assets may have dropped to a quarter of pre-crisis
levels and the workforce slashed to a third of what it
was, but there are two major assets remaining.
These are the LNG (liquefied natural gas)
shipping company publicly listed Humpuss Intermoda and
the Humpuss Aromatik petrochemical project that
processes LNG from Arun in Aceh. Humpuss still earns
much of its revenue from oil, LNG and methanol shipment
contracts with Pertamina, using its 11 tankers. Though
the government has scrapped several service and shipping
contracts between private companies and Pertamina,
Humpuss Intermoda still has a long-term contract with
Pertamina until 2009.
In 1990, Pertamina granted
a 20-year concession to operate the lucrative Cepu
oilfield block to Humpuss Patragas, in cooperation with
Australia's Ampolex, which owned a 49 percent stake in
the field. In mid-2000 when Humpuss Patragas could not
pay its debts to IBRA, it was forced to sell its 51
percent stake in the fields to ExxonMobil Oil Indonesia.
The latter bought out both Humpuss and Ampolex.
Humpuss, with 16 debt-laden subsidiaries, had
"troubled" loans of more than $850 million (Rp6.76
trillion), making it IBRA's second largest debtor in
1999. But just before he went on the lam in November
2000 Tommy let go of one of his biggest assets, the
Jakarta International Cargo Terminal (JICT), for $147
million. That left Humpuss's obligations to IBRA almost
settled, with a mere $125 million needing to be
rescheduled.
Timber baron Bob Hasan, in the
next-door cell to Tommy in Nusakambangan Prison, was his
partner in PT Gatari Hutama Air Service, Perta Oil
Marketing, and Sempati Air.
There is no
verifiable information on whether or not Tommy still
runs the business from Nusakambangan, but when he was
languishing in Jakarta's Cipinang Prison awaiting trial,
his secretary Indriyani Yastiningtyas was recorded as a
daily visitor.
Tutut's roads and
hotels
Tutut, 54, commonly known as Mbak
(sister), started in business in 1983 with trading
company Citra Lamtoro Gung Persada (Citra Group). She
quickly built it into a diversified conglomerate with
interests in telecommunications, broadcasting, pulp and
paper. Citra was also a contractor for toll roads,
airports and harbors in the country, before expanding
operations farther north.
In 1995 through a
joint-venture company Citra Metro Manila Tollways Corp,
Tutut won a contract from former president Fidel Ramos
to build, finance and manage the 45-kilometer Metro
Manila Skyway Project through a 30-year
built-operate-and transfer (BOT) contract with the
Philippine government.
In July last year she
lost one of her main earners when letting go of her last
remaining stake in lucrative toll-road operator PT Citra
Marga Nusaphala Persada (CMNP). Most of Indonesia's toll
roads were built and operated by state-owned PT Jasa
Marga, but a 1989 decree, not revoked until 10 years
later, gave CMNP 75 percent of profits from toll roads
it operated in partnership with Jasa Marga. Jasa Marga
itself investigated allegations of corruption in some of
Tutut's toll-road concessions and subsequently barred
CMNP from participating in tenders for new projects,
including the Jakarta Outer Ring Road.
Tutut, an
icon on television broadcasts in her Muslim scarf, is
the least media-shy in the family. Thought to be worth
about $2 billion before the crisis, she still has some
big irons in the fire.
In Manila the Skyway has
been built and her group is building a 17.5km expressway
that will cut across Manila and connect two major
expressways.
Tutut also co-owns the five-star
Nusa Dua Beach Hotel in Bali with the Sultan of Brunei,
Hassanal Bolkiah.
Bambang's media and
broadcasting empire
Bambang Trihatmodjo, 49,
known for shunning the limelight, had an estimated
pre-crisis net worth of $4.5 billion. His conglomerate
Bimantara Citra (Bimantara), which he founded in 1982,
had interests in petrochemicals, banking, a car venture
with South Korea's Hyundai, satellite company Satelindo,
and the biggest private TV station, RCTI.
The
latter broke the monopoly of state-run TVRI when set up
by Bambang as the first private broadcaster in 1990.
From that year, a progressive downsizing of operations
saw Bimantara reduced from more than 100 subsidiaries
and affiliates to 51. When it went public in the middle
of 1995, only 26 of these companies were included in the
float; but as the crisis took hold in 1998, the bad
debts from 23 out of these 26 totaled Rp4.36 trillion.
Though Bambang was questioned over alleged
irregularities in closed Bank Andromeda, closed down by
the government in 1998, no charges were laid and he
still owns 14 percent of Bimantara shares through his PT
Asriland. The latter is a real-estate company he owns
with his wife and has been a major investment vehicle
for the couple. Asriland, through PT Bima Graha, the
holding company that controls the major stake in
Satelindo, is also a part owner of Satelindo.
Tycoon Hary Tanoesoedibyo, through holding
company Bhakti Investama (Bhakti), owns the largest
single stake in Bimantara with 24.9 percent, but
insiders say Tanoesoedibyo acted as a proxy for Bambang.
The main thrust of the group is media and broadcasting,
and it is well on the way to being the largest telecom
and media company in the country.
"We are now
dominant players in the two fastest-growing sectors in
the economy, and that was a strategic move on our part,"
Tanoesoedibyo said recently.
When media
operations are consolidated, the group will include
three television stations, numerous radio stations,
newspapers and other print media.
Bimantara owns
70 percent of Global TV, 53 percent of RCTI and 25
percent of Metro TV. It has holdings also in Indosiar
and Televisi Pendidikan Indonesia (TPI). Tutut still
holds 65 percent of the shares in TPI. In 1992 she stole
a march on Bambang by getting permission to transmit
peak-time programming nationally on TPI station while
Bambang's RCTI, bleeding money, was restricted to
encrypted broadcasts. RCTI won the right to broadcast
freely the following year and forged ahead to a market
leadership it holds to this day.
In 2002,
Bimantara made a net profit of Rp347.8 billion -
marginally up from Rp344 billion in 2001.
Though
Bhakti also owns Bentoel, a major kretek
cigarette maker, its media and broadcasting businesses
brought in Rp96 billion of the net income in 2002,
dwarfing a Rp24 billion net income the year before. The
increase was mainly due to advertising revenue from
RCTI.
The capital's top hotel, the Grand Hyatt
Jakarta, is listed among its prime assets, and it only
recently sold off its stake in the adjoining marble-clad
shopping mall, Plaza Indonesia.
In 1993 the
government handed a monopoly in the satellite business
to Bambang, who then set up two joint ventures with
state companies Telkom and Indosat to operate two Hughes
communication satellites. One of the ventures, Satelindo
(PT Satelit Palapa Indonesia), launched Palapa-C1 in
April 1996 from Cape Canaveral at a cost of $190
million.
Bambang himself also has a stake in
Jawa Power, one of several power plants, approved in the
1990s, whereby state-run power company PLN was forced to
buy electricity at above-market rates from these
companies in a series of long-term purchase agreements.
The $500 million power project in East Java involved the
disgraced US power company Enron, Siemens Power
Ventures, the 50 percent owner, and British energy
producer PowerGen PLC, which held 35 percent. A
subsidiary of Bimantara holds 15 percent.
The
inclusion of Bambang in the deal was par for the course.
A local partner was very often a condition for
government approval, and foreign companies wooed rent
seekers such as Bimantara to expedite the process.
Djiteng Marsudi, a former president of PLN, admitted
that power companies "dictated terms to us because they
had Indonesia's first family behind them". He told the
Wall Street Journal in 1998, "Resisting them was like
suicide."
Eleven cases of corruption, collusion
and nepotism in Pertamina were alleged to have caused
losses of $1.7 billion to the state.
British
consortium Foster Wheeler in 1989 won a Pertamina
contract to build the Balongan oil refinery in
Indramayu, West Java. Tutut and Sigit allegedly
conspired with Pertamina and then mines and energy
minister Ginandjar Kartasasmita to have the contract
awarded to Foster Wheeler, in return for which they
allegedly received cash payments.
The attorney
general in February 2001 questioned Sigit about the
alleged mark-up and bribes, but he and the others were
never taken to court. This August the AG quietly dropped
an investigation into an alleged corruption case
involving Tutut's fuel pipeline construction project in
Central Java, saying no irregularities had been found in
a contract Pertamina awarded to her consortium. This was
despite indications the deal caused the state to lose
millions of dollars.
Thus, despite the
widespread allegations of fabulous wealth gained at the
expense of the Indonesian treasury and taxpayers, the
family has largely survived intact, even including Tommy
with his jail time.
(Copyright 2003 Asia Times
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