The journey has not been completed (9)

 

Yien, Siti Hardiyanti Rukmana and Suharto

The journey has not been completed (9)

(Part Nine, Depok, West Java, Indonesia, August 10, 2014, 23:28 pm)

At the time the Minister Ginandjar Kartasmita became Minister of Mines and Energy I joined a group twice Minister to the location of the PT Freeport McMoran Mine in Tembagapura, Papua.

As a reporter for Reuters news agency I joined a group that accompanied the Minister Ginandjar Director General of General Mining Kosim Gandataruna, and two national businessman Aburizal Bakrie and Arifin Panigoro.

We at Halim Perdana Kusuma Airport picked up directly by the CEO of Freeport McMoran, Bob Muffet who bring corporate jets directly from Miami, New Orleans, headquarters of the headquarters of PT Freport McMoran.

  Since this initial two visits in October 1988 and Gina Muffet reported The Asian Wall Street Journal two often meet, play golf together and eat at the fancy restaurant.

I remember writing a column Dr. Rizal Ramli in Magazine D & R that essentially accuses the 'collusion' "according to the title in the column that is essentially going on collusion (flirting) case of granting shares of PT Freeport that should fall into the hands of the government, even in the hands of Aburizal Bakrie .

Negotiations with PT Freepot second stage (the first stage in 1967) there seems to ask Gina Indonesian shares increase from 10% to 20%. CoW both signed 30 December 1991, but an additional 10% stake was not to fall into the hands of the government, instead falling into the hands of Bakrie-owned company. When I ask, why fall into the hands of Bakrie not to the government, Mr. Ginandjar Government reasoned that time again ngak have the funds to purchase the shares of PT Freeport Indonesia.

Freeport and Ginanjar : "How Much Did You Get Pak Ginandjar?"

Unraveling the intricacies of the mining business during the New Order era of former President Soeharto is as difficult as unearthing raw ore miles under the ground. Nevertheless, Ginandjar Kartasasmita will be central to corruption inquiries into the giant Freeport mine now underway in Commission VIII of the House.

Commission VIII of the House, which deals with mining and energy, is currently delving into the deals done for the massive Freeport mine in Papua. Ginandjar Kartasasmita is currently Golkar's deputy speaker in the Peoples' Consultative Assembly and a former Minister for Mining and Energy. The Commission has found strong evidence of corruption in that he not only negotiated a deal for PT Freeport Indonesia which went straight to one of former President Suharto's most notorious cronies but involved his younger brother and another Minister in supplying the mine.

PT Freeport Indonesia is the Indonesian partner of Freeport McMoran Copper & Gold Inc (FMCG), a giant US-based mining company which owned 90% of the famous Freeport mine in the heart of Papua province prior to 1991.

With an estimated annual income of US$3 billion, the enterprise it seems spared no expense. "Not only Tom Beanal (an outspoken leader of the Papua community) who has gotten tired of fighting, even Suharto and all his officials have been bought," said one member of Commission VIII of the House to detikworld today, Wednesday 12/7/2000.

Ginandjar Kartasasmita is a name that has been frequently heard in the Commission's attempts to uncover the internal workings of Freeport Indonesia and Freeport McMoran Copper & Gold Inc (FMCG). Several Ministers and former Ministers of Mining and Energy appearing before the Commission have suggested they check with Ginandjar.

A member of Commission VIII, Erman Suparno, said that many things need to be clarified regarding the signing of a second contract between FMCG and the Indonesian government because at the end of the first contract all of Freeport's assets were to be acquired by the Indonesian government. "The agreement resulting in this second contract is not clear, so it raises the suspicion that there must have been a conspiracy between Freeport and government officials," Erman said.

The conspiracy started in 1988, fifteen years before the expiry date of the first contract, when Freeport Indonesia found the Grasberg deposit containing at least 72 million ounces of pure gold, silver and copper worth an estimated US$ 60 billion easily mined because it lay close to the surface.

Not wanting to lose the treasure, the boss of PT Freeport Indonesia, Bob Muffet made several strategic maneuvers to approach high-ranking officials in the Indonesian government. One of those targeted was Ginandjar, then Minister of Mining and Energy. Muffet and Ginandjar became close allies, as reported in The Asian Wall Street Journal in early October 1988. The two visited each other often, played golf together and dined in luxurious restaurants.

Freeport Indonesia proposed an extension of their contract in 1989, with an extension of the mining area to include the Grasberg site. Ginandjar negotiated for an increase in taxes and a bigger cut for the Indonesian government. Their share was raised from 10% to 20%. The agreement was signed on 30 December 1991. But the additional 10% was allocated to a private company named Bakrie Investindo. "What was going on? Is the Bakrie group more privileged than the Indonesian government? How much did you get Pak Ginandjar?" asked a member of Commission VIII, Nur Hasan.

The Bakrie group bought 10% of the shares in Freeport Indonesia for US$ 212.5 million. US$ 49 million was paid in cash but the remainder was pledged through syndicated credit from international banks. To cover for the doubt about Bakrie's financial condition, Freeport Indonesia guaranteed the credit. One year later, Freeport McMoran Copper & Gold Inc. reimbursed half of Bakrie's shares at quadruple the price.

Other allegations focus on the fact that PT Catur Yasa, owned by Ginandjar's brother Agus Kartasasmita, was brought in to establish and maintain the electrical power plant for the mine.

Commission VIII also questioned the involvement of the A Latief Corporation (ALC) owned by former Minister of Man Power Abdul Latief, which supplied peripheral facilities to support the mine, including hotels, housing complexes, soldiers barracks and even golf courses. Astrid S Susanto, a House members who is also a professor at the Faculty of Social and Political Sciences at the University of Indonesia, told detikworld that the second contract between Freeport and the Indonesian government was legally defective.

He claimed the agreement, known as Kontrak Karya II, was lex specialis, beyond Indonesian law. "Lex specialis is only supposed to be applied to several articles. But the whole Kontrak Karya II agreement was lex specialis," explained Astrid. In this matter, the lex specialis agreement should be agreed by the House. "Now it depends whether the House agrees with that agreement," said Astrid.

In an interesting development which cause much excitement at the Attorney General's offices today, a photocopiy of a warrant to detain Ginandjar in connection to alleged corruption, collusion and nepotism cases during former president Suharto's regime was widely circulated. Signed on Thursday, 6 July 2000, the warrant ordered the Deputy Attorney General for Special Crimes, Ramelan SH, to detain Suharto's cronies, listed among them, Ginandjar. Other notable names on the list are former Vice President Soedarmono, former State Secretary Sa'adilah Mursyid and two infamous tycoons, namely Soedono Salim and Prajogo Pangestu.

The Attorney General, however, flatly denied that the warrant existed. "What there is is a letter calling certain people to give evidence," a flustered Marzuki Darusman told the press after meeting with Commission II.

A media hoax or an unplanned leak? In any case, the fate of those detained may not be so bad afterall. Take Syahril Sabirin, currently detained in connection with the embezzlement of millions of dollars from the Central Bank which he heads. Syahril has apparently again put himself forward to become an Indonesian Ambassador. A move which Marzuki today claimed was solely at Syahril's instigation, not denying that the government had considered the idea.

sources: http://main-conspiracies.blogspot.com/2009/05/freeport-and-ginanjar-how-much-did-you.html (Sunday, August 10, 2014)

Freeport and the Suharto Regime,

1965–1998

                                                                Denise Leith

I n functioning democratic economies a structural balance must be found

between state and capital. In Suharto’s autocratic state, however, a third

variable upset this equation: patronage. By using access to resources and

business as the major lubricant of his patronage style of leadership Suharto

actively encouraged the involvement of all powerful groups within the

economy. Eventually, the military, politicians, and the bureaucracy became

intimately involved in the most lucrative business ventures to the point

that to be successful in Indonesian business one required an influential

partner in at least one of these institutional groups, preferably with direct

access to Suharto.

   When Freeport began negotiations with the new military regime in

Jakarta in 1967 to mine the copper in West Papua, the American transna-

tional with the valuable political connections was the more powerful of

the negotiating parties, enabling it to dictate the terms of its contract. As

Suharto’s political confidence grew and as the American company’s finan-

cial investment in the province increased—and by association its vulner-

ability—the balance of power shifted in Jakarta’s favor. Eventually Free-

port became another lucrative source of patronage for the president.

Early History of Freeport in West Papua

In 1936, while on an expedition to the center of the island of West New

Guinea, a Dutch geologist working for Shell Oil, Jean-Jacques Dozy, was

struck by the sheer magnificence of a 180-meter barren black rock wall

covered in green splotches standing above an alpine meadow. 1 Realizing

he had discovered a huge copper outcrop Dozy knew that its inaccessibil-

ity meant “It was just like a mountain of gold on the moon” (Mealey

The Contemporary Pacific, Volume 14, Number 1, Spring 2002, 69–100

© 2002 by University of Hawai‘i Press

                                                                          69

70                          the contemporary pacific • spring 2002

1996, 71). The advent of the Second World War and the physical impos-

sibility of accessing the site in the rugged and inhospitable Carstensz

Range meant that Dozy’s report of the discovery of Ertsberg, or ore moun-

tain, lay forgotten for years. 2

   Freeport Sulphur Company (now Freeport-McMoRan Copper and

Gold Incorporated of the United States), became interested in Ertsberg in

1959 when a company geologist, Forbes Wilson, first heard of Dozy’s

report from a friend who, through his company Oost Borneo Maatschap-

pij (o b m), had taken out a concession for the area from the Dutch gov-

ernment. Persuading the company to send him to West New Guinea in

1960, Wilson was so excited by what he saw and sampled that he pre-

dicted correctly that Ertsberg would prove to be the largest above-ground

copper deposit discovered at that time. Having recently had its nickel-

mining projects in Cuba expropriated by Castro, Freeport was nervous

about making a substantial investment in the unstable region. Moreover,

the only way for a mining concern to access the site was via helicopter, and

even with the most powerful helicopter available at the time it would take

months to move just one small drill rig and crew to the remote site. Thus,

technical problems and political concerns saw Freeport shelving the Erts-

berg project in the early sixties.

Freeport’s Entry into West Papua

In the boom times of the sixties, mining was the magnet for speculative

international capital, and the company did not forget the possibilities it

glimpsed in West New Guinea. In early November 1965, just a couple of

weeks after a military coup sidelined Indonesian President Sukarno, two

Texaco executives from Indonesia with close associations to the new mil-

itary regime approached Freeport. They informed the company that the

time was right to open negotiations with the generals in Jakarta over Erts-

berg (Wilson 1981, 155). Freeport’s subsequent decision to commit well

over a hundred million dollars to the risky project seemed extraordinary

given the political instability in Indonesia at the time. Freeport’s confi-

dence, however, may be understood in the context of its connections to the

highest echelons of power in Washington, the United States’ expanding

military power in the region, and its interest and influence in the events

unfolding in Indonesia.

   The chairman of Freeport Sulphur was, for a time, powerful Republi-

can John Hay “Jock” Whitney. Jock had founded the New Republic,

leith   •   freeport and the suharto regime                             71

became editor-in-chief of the New York Herald Tribune, owned a com-

pany that had contracts with the Defense Department, and had financially

supported the Eisenhower presidential campaign. He is also reputed to

have maintained ties with the Central Intelligence Agency after having

worked alongside business partner Nelson Rockefeller for the Office of

Strategic Services (o s s) (Pease 1996; Colby 1995; Reich 1996, 216–217).

Another board member, Robert Lovett, was an influential cold war leader

of the Washington establishment, having served under four presidents—as

assistant secretary of war for Roosevelt, undersecretary of state for Tru-

man, deputy secretary of defense under Eisenhower, and adviser to Pres-

ident Kennedy on appointments. He also served as a member of Kennedy’s

secret Executive Committee of the National Security Council during the

Cuban missile crisis (Isaacson 1992, 357; Pease 1996; Reeves 1991, 222;

Colby 1995, 221; Schlesinger 1965, 116, 128, 685). Another influential

board member was Admiral Arleigh Burke who was a fervent anticom-

munist and one of the architects of the Bay of Pigs invasion (Wilson 1981,

186–187; Schlesinger 1965, 181).

   Augustus (Gus) Long, one of the two persons who originally

approached Freeport suggesting it open negotiations with Jakarta in 1965,

held a position on President Johnson’s Foreign Intelligence Advisory Board

and was involved in the planning of covert operations. The other, Julius

Tahija, was a Texaco-Caltex executive and former military man, whose

close links with Sukarno and the military had enabled him to keep Caltex

and Texaco property safe during the fifties, when Sukarno was in the pro-

cess of expropriating foreign assets. At the time Caltex was jointly owned

by Texaco and Rockefeller’s Standard Oil of California. Tahija, Long, Hay,

and Lovett all boasted close links to the Rockefellers, while two Rocke-

feller family members, Jean Mauze and Godfrey Rockefeller, held seats

on the Freeport board, as did Rockefeller associate Benno C Schmidt.

   Given such connections, it is not implausible that the company was

privy to information which satisfied it that, with backing from Washing-

ton, the generals in Indonesia, who were at the time overseeing the slaugh-

ter of Indonesian communists, would be able to ensure political stability.

As well, advancements in helicopter technology stimulated by the Vietnam

War now made the operation technically feasible.

   While Freeport’s connections must have given it a measure of assurance,

the messages coming out of Jakarta were also viewed as positive. In 1966,

with the country facing bankruptcy, one of the main priorities of the mil-

itary regime was to gain international recognition and political support

72                          the contemporary pacific • spring 2002

while attracting foreign aid and investment to foster stability, legitimacy,

and development. To entice western capital the regime promoted a decid-

edly pro-western, pro-foreign investment alignment, which included purg-

ing the communists from within its ranks and the nation at large, and

employing a group of Indonesian economists trained in America who,

together with International Monetary Fund and World Bank experts, drew

up a restructuring plan for the economy.

   Although over time the balance of power would change between Free-

port and Jakarta, in 1967 the American mining company with the influen-

tial connections was the most powerful of the two, and there was little the

anxious generals in Jakarta would not do for Freeport. With new legisla-

tion yet to be passed to define foreign investment and the company reject-

ing the old rules, Jakarta requested that Freeport produce its own contract.

In April 1967, Freeport became the first foreign company to sign with the

new government and the only one to sign under such favorable condi-

tions.3 As noted by a member of the Freeport negotiating team, given the

fact that Indonesia did not have sovereignty over the area at the time “the

legal basis for an agreement was vague” (Mealey 1996, 84). Moreover,

regulations at the time stipulated that Indonesia was not open for foreign

mining investment; the contract did not have the president’s signature, but

rather that of Lieutenant General Suharto as minister for defense and secu-

rity and head of the Presidium of the Ampera Cabinet (k e r e b o k 2000).

   Forbes Wilson believed that Jakarta was probably under political pres-

sure from the United States to accept Freeport’s contract; however, an

Indonesian cabinet minister at the time, Professor Dr Mohammad Sadli,

claimed in 1998 that the acceptance of the contract was a political deci-

sion by Jakarta to exploit the “unsubtle connection” between letting for-

eign companies in and securing international support (Sadli 1998). That is,

by signing with Freeport the generals believed they were cementing ties

with the largest economy and most powerful state in the world. Given the

level of Freeport influence in Washington, the connection Jakarta made

through Freeport was impressive and its objectives feasible. Moreover, as

noted by retired Minister of Mines Soetaryo Sigit, the importance of the

Freeport contract was also that it indicated “to the world that Indonesia

[was] serious about trying to accommodate foreign investment” (Soe-

taryo 1998).

   The mutually supportive relationship that Jakarta hoped to nurture was

evident from the beginning. At an international conference convened in

Geneva in November 1967 to sell the new government’s business creden-

leith   •   freeport and the suharto regime                                   73

tials, Freeport actively lobbied on its new partner’s behalf. With Freeport

symbolizing the new-frontier image Indonesia wished to promote inter-

nationally, and with pressure from Washington, there followed a flood of

technical expertise and foreign capital—$1,226 million by 1969. This

inflow was not only crucial in keeping the regime afloat in the early years,

but its continuation assisted Suharto in maintaining power for another

three decades.

   In return for its services at such a critical time, Freeport’s needs were ful-

filled by Jakarta: it got a highly favorable contract, the riches of Ertsberg,

and the Indonesian military to protect it. Under the contract, Freeport

was given mining rights for thirty years within a 250,000 acre concession

with a three-year corporate tax holiday. There were no Indonesian equity

requirements, and Freeport was not under any obligation to the tradi-

tional Papuan owners of the land, the Amungme and Kamoro peoples.

The company was not required to pay compensation to the traditional

landowners, nor was it obliged to participate in local or provincial devel-

opment. Finally, there were no environmental restrictions.

   Because only small towns and oil exploration sites on the coast existed

in West Papua in the late sixties the project took five years to complete.

The first task was to cut an access road through the inhospitable terrain;

the road accounted for almost one-third of total mine expenditure and

took twice as long to build as all the other infrastructure combined. Bech-

tel, the American engineering company contracted to build the project for

Freeport, claimed that the access road was the most difficult project it had

ever undertaken (Wilson 1981, 192). Most bizarre of all, given the sur-

roundings, was the company town of Tembagapura (Copper Town). Built

ten kilometers below the mine complex in a highland valley surrounded

by jungle, it is a completely self-contained western dormitory-style town.

While the construction of the mine itself in the central mountains of West

Papua was an extraordinary engineering accomplishment, the company

also built a port and an airstrip in the lowlands. The company provided

all goods, services, infrastructure, and utilities for Tembagapura and the

mine, including such basic necessities as water, power, roads, medical sup-

port, transportation (air, road, and sea), accommodation, schooling, recre-

ation, food, and waste disposal.

   The building task was so daunting that in 1970 the problems Bechtel

was experiencing and the extent to which the budget had been exceeded

(expectations of around $120 million were exceeded by approximately

$80 million) saw Freeport’s funding at risk, forcing the company to

74                          the contemporary pacific        •   spring 2002

threaten to cancel Bechtel’s contract (McCartney 1989, 157). In response

Bechtel offered to guarantee financing and called on the services of its

friend Henry Kearns who, as a close friend of Richard Nixon and head

of the Export-Import Bank, ignored the bank’s objections and had the

Freeport loan approved. Despite the financially advantageous contract,

the enormous construction costs and falling copper prices meant that a

profit was not realized until 1974.

The Beginnings of the Relationship with

the Indonesian Elite.

Initially both Tahija and Texaco had been given a small interest in the

company (Sadli 1998; Tahija 1995, 161), and on Tahija’s advice Freeport

had engaged the legal services of former senior bureaucrat Ali Budiardjo

to assist with contract negotiations. Budiardjo was also given a financial

interest in the operation.

   By the mid-seventies, having invested around $300 million in the pro-

ject, the company was losing its previous advantage of capital mobility,

and by association its power was waning. At the same time Suharto had

become politically more secure on both the domestic and international

stages. Needing to service the rising debt of the oil company Pertamina 4

and bolstered by nationalist sentiment at home, Suharto requested that

Freeport, which had just begun to realize a profit, forego the last eighteen

months of an agreed tax holiday. The president also requested that the

company give the government an 8.9 percent equity in the operation.

Given that Freeport Indonesia was an unlisted company and had, at that

stage, invested approximately $300 million in the project, an 8.9 percent

interest should have been valued at approximately $29 million. Instead the

government’s share was valued at $9 million. At the same time Budiardjo

was given the presidency of Freeport Indonesia.

   A few years later Jakarta came to its new partner’s aid. With copper

prices plummeting and Japanese buyers pressuring the company to cut

prices or close down the operation, Freeport was faced with serious prob-

lems. Jakarta responded by protecting the Freeport operation and, by

association, its own investment, by threatening the supply of Indonesian

oil to Japan (Tahija 1995, 164). At this stage, as noted by Ron Grossman

from Freeport’s financial department, “nothing was accomplished unilat-

erally, it was give and take. It was a very, very good relationship” (Mealey

1996, 85).

leith • freeport and the suharto regime                                    75

Discovery of Grasberg and the New Contracts

For nearly twenty years Freeport operated quietly in West Papua, until by

the late eighties Ertsberg had all but died, leaving behind an open pit over

360 meters deep and 2 kilometers wide, filled with green, copper-impreg-

nated water. During its life Ertsberg had produced approximately 32 mil-

lion tonnes of copper, gold, and silver and had succeeded in generating an

average annual revenue of $300 million for the company. In 1988 Freeport

announced that about 2.2 kilometers away from Ertsberg it had discov-

ered its El Dorado, Grasberg. However, there had been rumors of the dis-

covery more than a decade before. Why the company decided to withhold

the announcement until 1988 is open to conjecture. Because o b m, the

original leaseholders, still retained a 5 percent interest in Freeport Indone-

sia, the company may have waited until Ertsberg was exhausted to buy

out its partner cheaply. Moreover, during the late seventies to mid-eighties

the decidedly unattractive Indonesian third-generation mining contracts,

which restricted foreign ownership of companies to an eventual 49 per-

cent, were in force. It would appear that it was in Freeport’s interest to

delay the announcement.

   After Freeport bought out its partner and the law was changed, Free-

port signed two new contracts for Grasberg in 1991 and 1994. Julius

Tahija described how, at the time, the company presented a proposition

to the government that he believed it could hardly refuse. While a num-

ber of companies had been given exploration permits around the original

Freeport concession, none had the capital to proceed with the costly oper-

ations. Freeport proposed that Jakarta give it permission to explore these

areas, and in return it would spend $20 million on exploration while mak-

ing the results available to the government. Jakarta was then free to give

the concessions to whomever it wished. The government agreed, cancel-

ing the exploration permits it had given to other companies (Tahija 1995,

178). Not surprisingly, Freeport was eventually given the mining rights to

this land. In total the two contracts gave Freeport exploration rights for

approximately nine million acres across the spine of West Papua and the

right to mine any discoveries for a further fifty-year period. Once again,

Freeport was not forced to operate under restrictive environmental laws or

to compensate the traditional landowners for loss of land. 5

   Positioned along the “ring of fire” (the geological zone where the Indo-

Australian and Pacific plates collide), the Freeport mining concessions are

in potentially one of the highest mineralized zones in the world. Referred

76                          the contemporary pacific          •   spring 2002

to in the industry as “an elephant”— a geological term for an extremely

rich mineral deposit—Grasberg dwarfed Ertsberg in every respect. Not

only was it physically more imposing, but Ertsberg’s productivity pales

into insignificance compared with the riches unearthed at Grasberg. In

1999 alone Grasberg produced more than double the ore recovered from

Ertsberg during its life. What can be considered the Grasberg complex (the

Grasberg mine and the surrounding above- and below-ground mines) con-

stitutes the world’s largest known deposit of gold (91.4 tonnes of gold

compared to its nearest rival, Freegold in South Africa at 60.44 tonnes 6 ),

currently holds the world’s third-largest open-pit copper reserves (32 mil-

lion tonnes), and at extraction rates of less than 10 cents per pound has

the lowest extraction rates for copper in the world. Estimates of Gras-

berg’s worth continue to increase; despite all predictions, the final worth

of the mine is impossible to establish for it is classified as “open at depth,”

a euphemism for a bottomless pit, and yields a greater percentage of gold

per tonne the deeper the mine goes. Estimates of Grasberg’s eventual

worth have ranged from $54 billion to $80 billion.

   Similarly impossible to establish is the potential of the Freeport conces-

sion. Exploration on over 6,000 sites has identified about seventy poten-

tial mining sites, and drilling has commenced on a number of them.7 At its

peak, Ertsberg processed 25,000 tonnes of ore per day; currently Grasberg

is daily moving approximately 700,000 tonnes of earth and discarding

over 230,000 tonnes of it into the local river system as tailings. Grasberg

moves more tonnes of earth per day than any other mine. For comparison,

at its height Bougainville discharged around 140,000 tonnes per day and

Ok Tedi less than 100,000 (Earthbeat 1996). The open-pit Grasberg mine

is so large and located at such a high altitude that, except for early morn-

ing, the site is continually shrouded in cloud, necessitating satellite track-

ing of the huge mining trucks that operate 24 hours a day, 365 days a year.

   Once a company has committed large amounts of capital to a project,

the host nation is in a much stronger bargaining position. Between 1967

and 1991 the power relationship between the Indonesian state and foreign

capital shifted a number of times, whereas between the regime and the

company it had shifted significantly in the state’s favor. No longer was

Suharto plagued by political insecurities or desperate to please as he had

been in 1967. Instead twenty-four years of authoritarian rule allowed him

to exploit incoming foreign capital to support the patron–client relation-

ship that characterized the state. Conversely, once it had invested heavily

in the province, Freeport’s lack of mobility tended to undermine its bar-

leith • freeport and the suharto regime                                   77

gaining position and it was willing to concede much to the state to secure

the mining rights to Grasberg as well as further exploration rights. Not-

withstanding the parading of Freeport “heavies,” Suharto drove a hard

bargain.

   In January 1991, a year before the signing of the new contract, the gov-

ernment had increased its own holding in PT Freeport Indonesia from 8.9

percent to 10 percent for $18.1 million. As was standard procedure with

the Suharto government, Jakarta was not required to outlay capital.

Instead, the transnational skirted the US Foreign Corrupt Practices Act

while managing to finance a foreign government into the company by

negotiating “carried interest.” That is, Freeport-McMoRan agreed to

withhold 40 percent of the dividends owed to Jakarta for its shares in

Freeport Indonesia until the purchase was paid for. Higher payments to

the government, restrictive exploration conditions, incorporation in Indo-

nesia, further Indonesian equity in the company, and an unwelcome com-

mitment to build a smelter on Java, were just some of the contract condi-

tions demanded by Jakarta.

   The smelter in Gresik, east Java, represented a significant financial bur-

den for Freeport, which, with partners Mitsubishi Materials Corporation

(60.5 percent), Mitsubishi Corporation (9.5 percent), and Nippon Min-

ing (5 percent), completed the project in 1999. During construction, costs

skyrocketed from an estimated $300 million to $700 million. To ensure

the completion of the project Freeport agreed to “support an after-tax

return of 13 percent to the larger partner, if necessary, for the first twenty

years of commercial operations, [while] the 10 percent partner was given

an option . . . to require the parent company, Freeport-McMoRan Cop-

per and Gold Inc, to purchase the 10 percent interest at a 10 percent

annual return” (Freeport 1994, 33). Apparently Suharto’s notorious char-

ity, Nusamba, 8 partnered Mitsubishi Materials in this lucrative venture

(Shari 1998).

   In accordance with the terms of the contract, the operating subsidiary,

Freeport Indonesia, was incorporated in Indonesia and changed its name

to PT Freeport Indonesia. As in 1967, this second contract saw Freeport

as the first company to sign under a new Foreign Investment Law that gave

preference to foreign mining companies like Freeport investing in the

nation’s underdeveloped eastern provinces. These companies were allowed

to retain 100 percent ownership of their operation while foreign compa-

nies investing in the other provinces were required to gradually divest up

to 51 percent of their shares to Indonesian nationals. Despite this law,

78                          the contemporary pacific          •   spring 2002

Suharto took the opportunity to extend his patronage by demanding fur-

ther Indonesian equity in the Freeport operation.

   Ginandjar Kartasasmita, the minister of mines and energy and a patron

of the indigenous business community, informed Freeport-McMoRan

that it was required to divest 20 percent of its Freeport Indonesia equity

within ten years to Indonesian nationals and thereafter another 25 per-

cent in 2.5 percent lots. Moreover, should it fail to sell at least another 20

percent of this second allotment of shares on the Jakarta Stock Exchange,

it would be required to divest 51 percent of Freeport Indonesia shares to

Indonesian nationals (c ow 1991). There seems to be no record of this

second, unpalatable clause being made public at the time.

   With 90 percent of PT Freeport Indonesia held by Freeport-McMoRan

and approximately 10 percent held by the government, an Indonesian

buyer had to be found for another 10 percent within the next nine years.

The group that Freeport-McMoRan sold this 10 percent to was the Indo-

nesian conglomerate Bakrie Brothers headed by the minister’s friend, Abu-

rizal Bakrie. At the time Bakrie was Indonesia’s most prominent indigenous

businessman and, along with Ginandjar, had been a member of Suharto’s

notorious Team 10. 9 At the time he was also close enough to Suharto to

be considered a family member (Aditjondro 1998). All parties involved in

the negotiations have publicly stated that Freeport’s decision to sell to

Bakrie was purely a business decision, with no pressure from the govern-

ment. In 1996 Paul Murphy, the executive vice president of PT Freeport

Indonesia, related an entirely different version of events.

   Murphy claimed that when the company was informed of the contrac-

tual obligations, Freeport-McMoRan was thinking of listing the Freeport

Indonesia shares on the Jakarta Stock Exchange. Given that at the time

the total value of the Jakarta Stock Exchange was reported to be only $60

million, the suggestion that Freeport-McMoRan was considering listing

over $200 million of PT Freeport Indonesia shares is questionable.

According to Murphy, however, this option was thwarted by Ginandjar,

who told the company that the government would send three potential

partners from which the company could make a choice. In late 1990

Aburizal Bakrie paid a private visit to Freeport’s Chief Executive Officer

Jim Bob Moffett, in Louisiana, informing him that he was the partner

Freeport required (Borsuk 1994, 1). To Murphy’s knowledge Freeport-

McMoRan had no choice, with Bakrie the only potential partner ever sent

by Jakarta. He described the decision to sell to Bakrie years before it was

contractually required as a “sign of good faith” between the company

and the Suharto government, although director general of mines at the

leith • freeport and the suharto regime                                 79

time, Kosim Gandataruna, is reported to have claimed that Ginandjar

recommended to Freeport to sell immediately (Murphy 1996; Waldman

1998).

   According to Freeport-McMoRan’s 1991 annual report, on 31 Decem-

ber 1991, just one day after signing the contract with Jakarta, Freeport-

McMoRan issued 10 percent of PT Freeport Indonesia to Bakrie Broth-

ers. Freeport-McMoRan was then paid $212.5 million on 6 January 1992

for the stock, but Bakrie only ever supplied $40 million of this. Freeport-

McMoRan and Freeport-McMoRan Copper and Gold jointly guaranteed

the remaining $173 million of the payment to itself on behalf of the Indo-

nesian businessman with important connections (Freeport 1991, 30–31).

The first loan repayment by Bakrie Brothers was due exactly one year

later, in December 1992. Bakrie never made this repayment because just

one week before this date it sold 49 percent of its PT Freeport Indonesia

shares back to Freeport-McMoRan for approximately $211.9 million

(Borsuk 1994). There appear to be problems with this deal.

   Freeport’s 1991 contract stipulated that it must have a 20 percent Indo-

nesian share holding; therefore Freeport-McMoRan could not directly buy

back 4.5 percent of its own shares from Bakrie Brothers as this would

increase its direct holding in PT Freeport Indonesia to approximately 85

percent. In an attempt to overcome this legal impediment Bakrie Broth-

ers listed its holding of Freeport shares on the Jakarta Exchange through

a company it created expressly for this purpose, PT Indocopper Inves-

tama. Indocopper’s only asset at the time was the Freeport shares. Free-

port-McMoRan then purchased 49 percent of this Indonesian company

on 23 December 1992 for just short of $211.9 million. Given the terms

of the new contract (20 percent Indonesian equity), Freeport-McMoRan’s

indirect purchase of shares through PT Indocopper Investama violated the

terms of the 1991 contract. Thus, exactly one year after purchasing the 10

percent interest in Freeport, for $212.5 million, and precisely when Bakrie

Brothers was due to make its first installment on the Freeport shares, Free-

port-McMoRan paid Bakrie close to the original purchase price for half

the number of shares.10 Not only was Bakrie saved from making its first

payment, but the twelve-month deal gave Bakrie 5.5 percent of Freeport

for virtually nothing, with Bakrie making over $200 million on an outlay

of $40 million.

   Even though the original purchase by Bakrie Brothers officially occurred

on 31 December 1991, when the market price of Freeport-McMoRan

Copper and Gold shares was approximately $32.88, the company has

claimed that the purchase price for the deal had been negotiated twelve

80                         the contemporary pacific        â€¢   spring 2002

months earlier, in January 1991. At that time Freeport-McMoRan Cop-

per and Gold’s Class A common stock—the shares on which the deal was

calculated—were trading at approximately $19.50. Thus, with the stock

rising to $43.76 (adjusted for share splits) by December 1992—when

Freeport-McMoRan bought back the Freeport stock from Bakrie—the

company could justify paying Bakrie double the purchase price. However,

if the purchase price had been calculated on the official date of the trans-

action, that is 31 December 1999, Bakrie would have needed to pay $73

million more for the share holding. Not only are the financial calculations

questionable, but if Freeport-McMoRan had agreed in January 1991 to

sell 10 percent of PT Freeport Indonesia, the shareholders of Freeport-

McMoRan and the market were legally entitled to be informed.

    In March 1997 it would appear that Bakrie, no longer in Suharto’s

favor, was forced by the president to sell his remaining Freeport shares,

held by PT Indocopper Investama, to Suharto’s yayasan, Nusamba, for

$315 million. Nusamba supplied $61 million of the purchase price, while

Freeport underwrote the balance of $254 million. Just one month before

this deal was finalized Freeport had been offered a 15 percent interest by

the president in what appeared at the time to be the biggest gold find in

history, Busang. 11 With Freeport agreeing to subsidize interest payments

on the Nusamba loan, by 2000 the company had apparently lent the

Suharto yayasan $43.7 million (Bryce 2000). At the end of July 2001,

Freeport announced a $525 million offering of convertible senior notes

that, in part, may be used to pay the balance of the $254 million loan

taken out on behalf of Nusamba should Nusamba default. The loan is

guaranteed by Freeport-McMoRan and due to mature in March 2002.12

    Before Suharto was forced from office, the original deal brokered

between Bakrie, Freeport-McMoRan, and the Suharto minister would

never have been allowed to make front-page news, but in late 1998, with

the issues of corruption, collusion, and nepotism dominating the political

agenda, the ethics of this deal were questioned by American academic Jef-

frey Winters when he suggested that Ginandjar’s involvement in the deal

was worthy of investigation (Catan 1998). It was also claimed at the time

that Ginandjar’s son, Agus Gumiwang Kartasasmita was given a waste

disposal contract with Freeport. Ginandjar, Bakrie, and Freeport

responded by denying Ginandjar had any involvement in the deal. The

minister also claimed that none of his children had a contract with Free-

port. As noted previously, Murphy stated in 1996 that Ginandjar sent

Bakrie to partner Freeport-McMoRan, while in the same year a company

leith   •   freeport and the suharto regime                               81

publication noted that its sewerage treatment systems would be priva-

tized and run by PT Agumar Rust Indonesia, of which the minister’s son

Agus is a 30 percent shareholder (p t f i 1996, 23:16). Members of Ginan-

djar’s immediate family have also been employed by the company.

Outsourcing and Purchasing an Insurance Policy

After the signing of the contract, Freeport’s actions were dictated by the

time constraints built into the contract, which in turn exacerbated existing

financial problems. Freeport needed to acquire as much capital as quickly

as possible to expeditiously complete an extensive exploration and expan-

sion program. Eventually Freeport was forced to outsource or privatize

most of its nonmining activities.

   Freeport’s restructuring program saw it subcontracting the building of

new, nonmining infrastructure to outside companies and selling off non-

mining or nonoperating assets such as service industries (eg, electricity,

shipping, residential, and so on). In all instances, it would appear that the

assets were sold to Indonesians with close associations with the Suharto

family, and Freeport maintained a minor partnership. The purchaser guar-

anteed that it would operate these assets and provide the goods and ser-

vices back to Freeport and in return Freeport would provide a fee and a

guaranteed income. By giving individuals with power, wealth, and political

influence a risk-free interest in the continued operation and profitability

of Freeport, the outsourcing program effectively strengthened the com-

pany’s political insurance policy with the Suharto regime. Although Free-

port liked to argue that its outsourcing program was devised to redefine

its role in the community and accumulate wealth by selling off assets, the

arrangements made were economically lucrative for the Indonesians and

of dubious economic value to the company. Nevertheless, at the time such

deals appeared to be politically astute moves.

   The biggest winner in the outsourcing program was Dr Abdul Latief

who became Suharto’s minister for manpower and, like Bakrie and Ginan-

djar, was one of the favored members of Suharto’s Team 10. According to

Peter Waldman, Latief was also introduced to Freeport by Ginandjar,

although Ginandjar has denied this (Waldman 1998; Robinette 1998).

Freeport and Latief became joint partners in an operating principal called

PT ALatieF Nusakarya Corporation (ALatieF), which bought housing and

shopping complexes in Tembagapura and the Sheraton Inn in Timika from

Freeport. As was usual business practice, the Suharto favorite was well

82                          the contemporary pacific • spring 2002

looked after by the company, for not only did Freeport-McMoRan guar-

antee a minimum rate of return on Latief’s investment (15 percent after

tax), but Freeport-McMoRan raised and guaranteed most of the finance

for the purchase.

   By 1993 ALatieF had purchased from Freeport nonmining assets worth

approximately $270 million, with Freeport—the 33 percent partner—

guaranteeing 66 percent of the purchase price totaling $180 million

through the parent company, Freeport-McMoRan Copper and Gold.

Abdul Latief, with a 66 percent share of ALatieF, was required to provide

only $90 million. By 1998 ALatieF purchases from Freeport had risen to

$370 million, with Freeport carrying $255 million or 66 percent of the

debt and Abdul Latief assured of 66 percent of the profits.

   In 1994, when Freeport wanted to extend its exploration area, another

new contract saw it taking another influential Indonesian partner. PT

Setdco Ganesha (Setdco) and PT Indocopper Investama were each given

a 10 percent interest in the new area. While Bakrie shared ownership of

Indocopper with Freeport-McMoRan, the Setdco Group was owned by

Setiawan Djody who was also introduced to Freeport by “someone in the

Ministry” (Waldman 1998). Djody was not only friends with two of

Suharto’s sons, Sigit and Tommy, but was a partner in a number of

Suharto family ventures. By his own admission Djody’s success rested on

his association with the Suhartos, especially Tommy. 13

   Julius Tahija, through a subsidiary called Austindo Nusantara Jaya, was

also given a 10 percent interest in a joint venture between Duke Energy

Corporation (30 percent), PowerLink Corporation (30 percent) and Free-

port (30 percent). This joint venture called Puncak Jaya Power entered into

an agreement with Freeport where for approximately $215 million it

would purchase and expand Freeport’s existing power-generating project

and sell the electrical power service back to the company. As usual, in

return Freeport was required to guarantee Puncak Jaya Power “a mini-

mum rate of return and [was] obligated to make minimum payments suffi-

cient to allow the joint venture to meet its debt service” (Freeport 1994,

32). Ginandjar’s brother, also Agus Kartasasmita, sought a partnership in

the joint venture running Freeport’s power system but was rejected, appar-

ently because his company refused to provide any capital.14 He was, how-

ever, afforded a share in the company’s airline through his small con-

glomerate PT Catur Yasa. Moreover, it has been claimed that two of the

Suharto children, Bambang Triatmodjo (Freeport cargo ships) and Tommy

(power) also held, or continue to hold, contracts with Freeport. Finally, on

leith   •   freeport and the suharto regime                              83

the recommendation of Ginandjar, a Golkar party 15 faithful, Prihadi San-

toso, was employed by Freeport and currently holds the powerful posi-

tion of executive vice-president responsible for government relations.

   By 1997 it was rumored that Suharto was upset by the extent of Gin-

andjar’s friends’ lucrative contracts with Freeport and a number of these

were retracted and given to Suharto’s closest friend and business partner,

Bob Hasan, through his company PT Pangansari Utama. Pangansari

remains a major catering contractor to Freeport in West Papua.

   What was reported by Freeport as an asset-raising exercise simply

resulted in further debt for the cash-strapped company, with journalist

Peter Waldman calculating that between “1991 and 1997 Freeport made

at least $673 million of loan guarantees to finance three Indonesians with

close ties to Mr Suharto or his ministers” into the company (Waldman

1998). By selling its nonmining assets to influential Indonesians, Freeport

was making expensive payments on an insurance policy and doing busi-

ness the Suharto way.

The Importance of Freeport to Jakarta

From the very beginning Freeport had been considered by the government

to be one of the nation’s most valued assets and, according to Suharto,

essential to the economy. Initially, Freeport’s importance arose from the

political ramifications of the 1967 contract. Throughout the seventies and

eighties, however, Freeport’s continued capital investment, its ability to

extract the precious metals, and its political importance to the regime

increased the company’s stature. Not only did the company become the

principal developer and de facto administrator of the area around its mine

in West Papua, but the company and its associates have the distinction of

being one of the most successful and outspoken Indonesian lobby groups

in the United States. With the discovery of Grasberg the potential political

and economic worth of the Freeport operation to the government became

incalculable.

   From 1975 to 1986 Freeport paid the government, on average, $28.2

million per year and in 1988–89 it became the nation’s largest taxpayer.

By 1995, with a rise in copper prices and increased extraction rates, Free-

port paid direct to the government $295 million in dividends, taxes, and

royalties out of gross revenues of $1.48 billion. In the same year the com-

pany claims that indirect benefits totalled another $997 million. However,

by 1999, with a fall in resource prices, direct payments to the government

84                          the contemporary pacific • spring 2002

fell to $173 million in taxes and royalties and $29 million toward local

development. In total, between 1991 and 2000 Freeport paid direct ben-

efits to Jakarta of $1.6 billion. But direct benefits were always outstripped

by indirect benefits, which in the same period totalled approximately $7

billion, although this last figure is inflated by the inclusion of funds rein-

vested in company operations (p t f i 2000). In sum, since the company

began operating, it has calculated that by the end of 1999 it had paid

directly and indirectly a total of $10.2 billion to Indonesia, with 87 per-

cent of total revenues “remain[ing] in and benefit[ing] Indonesia” (p t f i

1999, 3). Given that the company claims it has invested $4 billion in the

mine and infrastructure, how much of the $10.2 billion has benefited

Indonesians or Papuans and how much has been reinvested in the com-

pany? Freeport also became one of the largest private employers in Indo-

nesia and, by its own account, runs one of the largest social-economic

development projects in that country. Paradoxically, with falling copper

prices at the end of the century resulting in a dramatic decline in Freeport’s

contributions to the government, the company’s financial importance to

Jakarta only increased. The rupiah crash in 1997–98, which saw the

majority of Indonesian conglomerates insolvent or technically bankrupt,

meant that Freeport’s foreign currency earnings increased its relative value.

   Freeport dominates the economy of West Papua, with its operations and

offshoots making it the largest purchaser and employer in the province

(l a bat-Anderson 1997, 1-1). In 1996, by its own account, it was respon-

sible for over 50 percent of gross national product, while the Jakarta Post

credits its royalties as accounting for 70 percent of gross national prod-

uct between 1985 and 1998 ( JP, 22 Feb 1999). Moreover, in 1995 Freeport

accounted for 86.52 percent of total imports to the province from outside

Indonesia (Elmslie 2000, 104). In the first half of 1997 alone, Freeport’s

increased copper-concentrate production was said to have accounted for

88.8 percent of a $56.6 million rise in West Papuan exports ( I T, 18 Sept

1997). Theoretically, Freeport’s exploitation of the copper and gold in

West Papua should have benefited the province greatly, for Indonesian

mining law stipulates that 80 percent of royalties and land rents are to be

channeled back to the province of origin (u n c ta d 1994, 12). In practice

the province benefited little from the taxes Freeport paid direct to Jakarta,

and little was ever constructively returned.

   The Suharto regime focused development on the west of the country,

most specifically Java, and accumulated wealth at the center in order to

support the patron–client state. Rather than supporting social and eco-

leith   •   freeport and the suharto regime                               85

nomic programs in West Papua, Jakarta’s focus was on the exploitation of

the province’s natural resources and the control and dispossession of the

Melanesian population through the militarization and “Indonesianiza-

tion” of the area. Around the Freeport mine site, Jakarta delegated respon-

sibility for any social and economic development to the company, so that

Freeport assumed the inappropriate role of developer and administrator

of its project area. Until the mid-nineties Freeport assumed this role not

simply because the central government was not interested in accepting its

responsibilities, but because it suited the company to do so. In the absence

of any recognizable bureaucratic presence, what Freeport essentially cre-

ated in and around its project area was its own fiefdom, with Jakarta sup-

plying the military to protect it.

    When Freeport arrived in West Papua, it was a remote and isolated

backwater. By 2000 the company had invested approximately $4 billion

in the area and had become the largest single American investor in Indo-

nesia. Without any notable aid or assistance from the government, in

thirty years the company created an extensive road system around the

mine (to United States standards) and built an international airport, a

four-star hotel, two hospitals, telephone systems, power stations, a deep

water port, and two American-style towns. After the company faced crit-

icism over its social and human rights policies, it committed large amounts

to social and community services, spending $153 million between 1992 and

1999 on schools, scholarships, health care, and housing. The company

also maintained its own water, electricity, sanitation, and garbage utilities

and, in the later years, assisted the local government with these services

for the people in the project area.

    The company’s purchasing power and its ability to employ large num-

bers of people made it a magnet for population transfer (approximately

3,000 residents in the sixties to over 100,000 by the end of the century).

It also made the area one of increasing economic activity, both legal and

illegal, and an obvious high-profile target for anti-Indonesian protest

from within the province. In response to these changes, together with the

increasing economic importance of the company to Jakarta, the military

presence increased; in the same period the occasional foot patrol had been

extended so far that the Freeport contract area had become one of the

most militarized zones in the archipelago. Despite these enormous social

changes, the bureaucratic presence remained inadequate, with the area

traditionally being considered the lowest rung of the civil-service ladder.

    Jakarta has always relied on the presence of the military to secure the

86                          the contemporary pacific • spring 2002

interests of foreign capital by controlling unrest, yet because the center

was never able, or indeed willing, to adequately fund this institution, the

Indonesian Defense Force or t ni (which until 1998 included the police),

was encouraged to rely on access to business—either through direct sup-

port or direct engagement—to perform its operations. This destructive

military-business alliance has thrived around the Freeport concession, for

not only does the military openly participate in most of the business in

Timika and the surrounding villages— much of which is illegal—but it is

logistically and financially reliant on Freeport support.

   Until the mid-nineties Freeport appeared content to have the military to

protect it and virtually no bureaucracy to interfere in its activities. If the

local population proved difficult, the company could rely on the military

to maintain order. In 1995, however, two damaging human rights reports

were released, detailing the killing of the indigenous people in and around

the project area (ac f oa 1995; Catholic Church 1995). These reports were

closely followed by riots targeting company property, and international

attention was sharply focused for the first time on Freeport’s operations

and its relationship with the military. In response, the company claimed

that it was being unfairly held accountable for the violent actions of this

institution and the appalling conditions in which many of the traditional

landowners lived. The blame, it stated, lay firmly with the government.

Supported by the United States ambassador to Indonesia, Freeport claimed

that it was time Jakarta accepted its responsibilities, suggesting that the

bureaucratic presence be increased and more of its tax dollars be invested

in the development of the local area. Suharto responded by suggesting that

the company needed to build better relations with the people living in its

project area—effectively returning the responsibility for any social prob-

lems to the company. The ac f oa report also caused Freeport to attempt

to place some distance between itself and the military. But with Freeport

committing tens of millions of dollars to supply infrastructure to the mil-

itary in the hope it would refrain from using Freeport’s facilities, the com-

pany simply succeeded in further strengthening ties between the two, espe-

cially in the eyes of the traditional landowners.

   Although in theory Indonesian law recognizes customary land rights

under adat or customary law, in practice traditional land rights carry no

legal weight, as the Indonesian legal system is based on cultural values not

sympathetic to the Papuans’ spiritual relationship with the land and their

hunter-gatherer existence (Ondawame 1997). What this means in practi-

cal terms is that should valuable resources be found on traditional lands,

leith   •   freeport and the suharto regime                                87

or should the state determine that it requires such land, then it automati-

cally becomes tanah negara (state-owned land). The expeditious and wide-

spread use of this law was instrumental in building the wealth and sus-

taining the power of the Suharto regime for over thirty years. Accordingly,

when Freeport discovered copper and gold in the Carstenz Range, the

indigenous people (who practiced stewardship, or a customary form of

land use and ownership which ensured that the land was passed down

through the generations) lost all rights to their land and its wealth in favor

of what Jakarta defined as the greater good of the nation. Little compen-

sation was required, and what wealth was generated did not belong to the

customary owners but to the state. By providing the expertise and fund-

ing that Jakarta could not to exploit the resources found on traditional

lands, foreign companies such as Freeport became exceptionally wealthy

at the expense of Indonesia’s most disenfranchised peoples.

   However, the traditional landowners of the Freeport concession have

not accepted the company’s right to occupy their land, or the destruction

of their environment, and have continually challenged its presence. In the

early years Freeport cared little for these people’s concerns, but the dis-

covery of Grasberg and the understanding that the company might remain

in the province for another fifty years saw it making a commitment to

address the traditional people’s development concerns. Moreover, Free-

port was sensitive to the fact that local resentment had closed down the

nearby copper mine on Bougainville, and that at the Ok Tedi mine the

local landowners had launched a highly publicized, damaging, and ulti-

mately successful lawsuit against Broken Hill Proprietary, the Australian

mine operator.16 Not until the release of the ac f oa report and its claims

of human rights violations involving the company did Freeport become

serious in its efforts and commit itself to spending at least 1 percent of its

annual gross revenue, or approximately $15 million over each of the next

ten years.

   At approximately the same time as Freeport announced this commit-

ment, Amungme leader Tom Beanal, with the assistance of Indonesian

and international nongovernment organizations, lodged a $6 billion class

action suit against Freeport in the United States courts, claiming that the

mine’s operations had led to the violation of human rights, environmental

destruction, and cultural genocide. Eventually the presiding judge ruled

against Beanal, and a second suit that followed two years later, stating

that both complainants had failed to prove their cases (Times-Picayune

1998). 17

88                          the contemporary pacific • spring 2002

   With Freeport providing funds for housing, schools, medical facilities,

and job training schemes, there has been a marked improvement in health,

education, and employment opportunities in the area. However, while tra-

ditional tribal life was difficult and dangerous, before the company came

everybody had a job, a home, land, and most important, a strong, spiri-

tual culture as a point of reference. Today the negative effects of develop-

ment are evident everywhere within the concession as the social fabric of

Papuan life disintegrates. Unemployment, lawlessness, a i d s, drug abuse,

and social, spiritual, and economic dislocation are evident. As the govern-

ment established twelve transmigration camps 18 in and around the Free-

port concession and the area became a magnet for migrants, the tradi-

tional landowners were displaced and marginalized, becoming a minority

within a minority on their own land.19 Moreover, with the concession

now awash with Freeport development funding, disagreements within and

between once relatively harmonious indigenous tribes over the payment of

compensation and access to development funding have divided the com-

munity and marred development programs, threatening to create a wel-

fare-dependent society.

   While Freeport has been critical of the government’s neglect and dis-

enchanted with the sociodevelopment role it has been forced to accept, it

is not surprising that the Suharto regime regarded the company highly:

The parent company in the United States acted as a high-profile public

relations agent for the Suharto regime and became part of one of Amer-

ica’s most outspoken and successful Indonesian lobby groups.

   In the last decade the disintegration of the communist threat removed

part of the legitimizing rationale of western support for authoritarian

regimes such as Suharto’s. At the same time the increasing political

activism of nongovernment organizations has meant that these regimes

have been forced to adopt “informal diplomacy,” that is, the hiring of

high-profile public relations firms and the manipulation of lobby groups

to protect their interests. In this regard the Suharto regime was able to

rely on its powerful corporate and bureaucratic friends.

   Financial support of politicians in the United States usually compels

them to support the interests of their benefactors. Between 1991 and 1995

Freeport and its company affiliates officially gave $650,000 to politicians

(South and Haurwitz 1996, a1). One politician generously supported by

Freeport was home-town Senator Bennett Johnston, who was so success-

ful in promoting Indonesia that in late 1995 he was described as “the most

pro-Indonesian member of the US Congress” (Schwarz 1995) and had the

leith • freeport and the suharto regime                                  89

dubious distinction of being Washington’s biggest supporter of American

arms sales to Indonesia. By 1998 Johnston was retired from politics and

on the board of Freeport-McMoRan. In the last twelve months the com-

pany has given $262,703 to politicians (e m c b c 2000) making it the sec-

ond largest contributor from the mining industry.

    Freeport is also a member of the US –Indonesia Society— a group that

works actively to maintain the Jakarta–Washington relationship. Formed

in 1994 to counter threats posed to the Indonesian business community

due to the lobbying efforts in Washington of nongovernment organiza-

tions and trade unions, the society has today become an influential pro-

Indonesia group. Reflecting the level of American investment in Indonesia,

its membership has been impressive. Business community representatives

include Freeport-McMoRan, Texaco, General Electric, Mobil, Chevron,

American Express, Edison Mission Energy, Hughes Aircraft, and Merrill

Lynch, all of which have or had business associations with the Suharto

family or influential Indonesians under the Suharto regime.20 Former

ambassadors and senior bureaucrats in the society have included Paul

Wolfowitz, Edward Masters, George Benson, and George Schultz. Indo-

nesian elite under Suharto also took defining roles in the society, includ-

ing members of Suharto’s extended family.

    The society claims it is not a lobby group and plays no advocacy role,

describing itself as a nonpartisan educational organization. This assertion

is worth questioning. With nongovernment organizations having sway in

Washington, the US–Indonesia Society’s job has been to counter their

influence by downplaying the issues of human and labor rights. During the

Suharto years the society promoted the concept that it was more produc-

tive to work with Jakarta than to confront it over these issues. In this way

it lobbied Washington to ensure that political and financial support to the

dictatorship and its military was maintained and, by association, its own

investments protected by the elite in Jakarta.

    The most persuasive argument an American corporation can make in

Washington is not necessarily the overt promotion of a foreign govern-

ment’s interests per se but the assertion that the company’s interests, and

by association those of the host nation, are identical to the home govern-

ment’s national interest. In this way American companies promote their

own interests, and if those interests coincide with those of the host nation

—as Freeport’s did with Suharto’s—then they are effectively promoting

the interests of the host nation to their own government. However, the

adoption of this promotional role by Freeport and the society was never

90                          the contemporary pacific • spring 2002

purely altruistic. By working for the Suharto government in Washington to

ensure that the state-to-state relationship remained stable, Freeport was

reaffirming its political worth to Jakarta and safeguarding its investment.

Given the public nature and depth of the Suharto–Freeport relationship,

it was essential to Freeport’s own welfare to keep its friend secure in the

Merdeka Palace. However, for those within Freeport who apparently pos-

sessed greater foresight than the flamboyant Moffett, the closeness of the

relationship between the company and the Indonesian dictator foreshad-

owed uncomfortable complications. With the fall of Suharto, as predicted,

these complications manifested themselves.

   Just two months after Suharto was forced to resign in May 1988 the

Indonesian publication Prospek ran a story claiming that in 1996 and 1997

Freeport paid $20.3 million directly to Suharto through one of his yaya-

sans and that, in exchange for the 1991 contract and the president’s pro-

tection, the company paid “tribute” each year of approximately $5–$7

million to Suharto (Prospek 1998). In late 1998 Freeport again made

front-page headlines in Indonesia when it was suggested that those com-

mitted to fighting corruption should investigate the Bakrie-Freeport-Gin-

andjar relationship. Politicians flexing their muscle in the new democracy

took the opportunity to establish nationalist credentials by attacking the

high-profile company now devoid of its powerful protector. Demands

quickly escalated to the cancellation of the Freeport contract. Belatedly

realizing how damaging such a move would be to the Indonesian econ-

omy, the politicians settled for calls to renegotiate the contract with a

greater distribution to Indonesians.

   In response to threats in the Indonesian parliament, Moffett resorted to

what had always worked in the past and in January 1999 flew to Jakarta

to pay a private visit to President Habibie. Shortly afterward Henry Kis-

singer, who had been a member of the Freeport-McMoRan board and an

employee of the company through Kissinger Associates since the eighties,

paid a private visit to President Wahid. In response Wahid informed his

ministers by letter that they were to give the company every assistance. For

a short time it appeared that Freeport had been able to assert its influence

in the new Indonesian democracy.

Conclusion

Although the relationship between the president and the company

remained amicable and mutually beneficial for thirty-two years, a shift in

the balance of power was reflected in the company’s contracts. In 1967

leith • freeport and the suharto regime                                    91

Freeport’s contacts in the United States and the promises of riches the com-

pany offered the struggling new government meant that Freeport could

dictate the terms of its investment. In 1991, with a change in the balance

of the power within the relationship, Suharto was better able to define

terms and to demand a much higher price from the American mining

company for rights to the largest gold mine on earth, the lowest extrac-

tion-price copper mine, and exploration rights to nine million acres. With

Jakarta content to provide the political and physical security for the com-

pany, by the nineties Freeport had become part of the president’s patron-

age system.

    Given its vast wealth of natural resources, the western half of the

Papuan island is considered an economic treasure chest that Jakarta can

ill afford to lose. Moreover, unlike East Timor where Indonesia’s claim of

sovereignty had never been internationally sanctioned, West Papua, with

its active separatist movement, has always been regarded as a political test

case of Jakarta’s ability to control ethnic tensions within the diverse repub-

lic. With the military reliant on the company to perform its operations

around the Freeport concession and the company’s presence helping to

justify the “Indonesianization” and control of the province, the mine has

become intimately linked to the military and its continued incorporation

of West Papua into the Indonesian archipelago. Freeport’s economic and

political importance to Jakarta only serves to reinforce the province’s

significance to the center, so that the company will continue to be central

to both Jakarta and Jayapura’s political aspirations. Today, because of its

past associations, Freeport is vulnerable.

    Until the fall of Suharto, Freeport had been able to operate in West

Papua with relative impunity because it had a close, multifaceted, and

mutually beneficial relationship with the government, the military, and, in

the later years, with the Suharto elite. But today it has become a potential

pawn in the volatile West Papuan political situation.

    The provincial government in West Papua wants a stake in the com-

pany, and in an attempt to appease the troublesome province the director

general of mining in Jakarta has supported this claim. The traditional

landowners also continue to blame Freeport for the human rights abuses

committed by the military and remain disillusioned by the disparities of

wealth that exist within the concession. Many of the Amungme and

Kamoro view the imposition of what they consider questionable develop-

ment programs as consolation prizes and a pittance compared to the riches

Freeport continues to extract from their land. Should the province’s fight

for independence turn violent, the company would be an obvious political

92                            the contemporary pacific • spring 2002

and economic target for the Organisasi Papua Merdeka (o p m), activists

who alternately want the company’s operation closed down or support

from Freeport for their claim of independence. At the same time, should

Jakarta appear to be losing its struggle in West Papua, the Indonesian mil-

itary, which also expects the company’s continued support, would be loath

to leave such an asset in the hands of the West Papuans. Today Freeport

is attempting to court both sides. Not only does it continue to support the

military in its concession, but it is financially supporting the Papuan Con-

gress, whose goal is independence (Joku 2001). The future of Freeport is

inextricably linked to the future of West Papua and fraught with difficul-

ties.

Notes

    1 Dozy (1993, 12). By the turn of the century the Dutch and other major pow-

ers were aware of the probability of vast natural resources in West New Guinea.

As early as 1907 a Dutch geological exploration had surveyed the northern region

of the island and discovered oil seepages, which led to the merging of Dutch and

British Petroleum interests into the Royal Dutch Shell Company. Moreover, just

prior to World War One, pressure from expanding United States interests in the

western Pacific had forced Holland to grant limited concessions in the border

regions of the island to the Americans and the Japanese. Although exploitation

of the rugged and untapped central region of the island was repeatedly refused

by the Dutch administration, it was later discovered that early agricultural con-

cessions granted to the Japanese had been used for oil exploration (Budiardjo

1988, 3).

    2 This rock was part of the Carstensz Range, which runs through the spine of

West Papua and contains Carstensz Top or Mount Jaya, the highest peak between

the Himalayas and the Andes. The mountain range also holds two of the world’s

five remaining equatorial glaciers, Carstensz and Meren. The first recording of the

siting of the glacial mountain was from the Arafura Sea in 1623 by the Dutch nav-

igator, Jan Carstensz.

    3 Seven months after signing with Freeport, Indonesia enacted the new For-

eign Investment Law (1967) and a new mining law, ushering in more restrictive

conditions for mining contracts.

    4 Pertamina was the state-run oil company used by Suharto as a rich source

of funding to secure the loyalty of the military. What should have been an

extremely lucrative business was eventually left holding debts of approximately

$10 billion when Suharto’s trusted friend General Ibnu Sutowo was forced to

leave in 1976. Sutowo was never called to account for outstanding mismanage-

ment of Pertamina or for overt corruption, as an investigation would have led

leith • freeport and the suharto regime                                        93

directly to the president. For descriptions of the uses made of Pertamina by

Suharto see Winters (1996) and Backman (1999).

   5 As with the 1967 Foreign Investment Laws, Jakarta provided guarantees

that it would neither nationalize nor expropriate the company’s mining opera-

tions, and provision for international dispute arbitration was also included (Free-

port 1993, 22). Under the terms of the new contracts Freeport agreed to pro-

gressively relinquish up to 75 percent of this area over a set period, although it

is allowed to mine potential areas of mineralization (Freeport 1991; 1992). The

1991 contract superseded the original 1967 contract and covered not only the

existing 24,700 acres (Block A) of the original Ertsberg mine but another con-

tiguous area of approximately 6.5 million acres (Block B) encompassing the new

Grasberg mine site and other areas. In 1994 a contract was signed by a PT

Freeport Indonesia subsidiary, p t ir ja Eastern Minerals Corporation (p t ir ja),

for another 2.6 million acres. This new contract encompasses three separate areas

of land which are referred to as the Eastern Mining Block and are next to Free-

port’s A and B Block operations. These three blocks (Block A, Block B, and the

Eastern Mining Block) gave Freeport a total of 9 million acres of exploration

leases with a guaranteed thirty years of operating and the option of two ten-year

extensions.

   6 However, Freeport is not the largest gold-producing company in the world.

Anglo American in South Africa has mines producing a total of 294.83 tons of

gold. In 1999 it was reported that Freeport was the fourth largest, behind Anglo

American, Newmont (124.62 tons), Placer Dome (106 tons), and Barrick (99.91

tons) (Drillbits 1999).

   7 In May 2001 Freeport announced its latest discovery, called the Ertsberg

East Surface, which promised up to 1.1 billion pounds of copper and 2.5 million

ounces of gold.

   8 Suharto’s “charities” (yayasans) were created by the president and his wife,

Tien, to supposedly address the disparities of wealth within Indonesia. Com-

monly referred to as his “retirement funds,” about ninety-five yayasans were

directly linked to Suharto, his family, or cronies. With Indonesian individuals or

companies required to “donate” a percentage of their earnings to the yayasans,

the lack of accountability and transparency meant that these organizations

became just another vehicle for the accumulation of untraceable wealth. The high-

est profile of these yayasans was Nusantara Ampera Bakti or Nusamba, formed

in 1982.

   9 As part of Suharto’s affirmative action on behalf of pribumi (indigenous

businesses), in 1980 he established a highly favored group called Team 10 “to

oversee government purchases of goods and services” on behalf of ministries, gov-

ernment bodies, state-owned companies, and eventually, the military. After suc-

cessive presidential decrees, each affording it greater power, Team 10 was finally

disbanded in 1988, but not before it made its ten indigenous members exceedingly

rich, gave the Suharto children a helping hand in business, and successfully dis-

94                             the contemporary pacific           •   spring 2002

posed of $48 billion of government procurements. As confided to Adam Schwarz

by a Team 10 member, “It was Team 10 under Sudharmono that made Bakrie big,

it made me big, it made a lot of us big” (Schwarz 1994, 118–119). While the eco-

nomic objectives of Team 10 were well stated, the formation of this group had

an underlying political agenda, as its membership and the political positions they

were to hold clearly demonstrated. The pribumi businessman who for a long time

was closest to Suharto, became the unofficial leading member of Team 10, and

eventually became head of the Indonesian Chamber of Commerce and Industry

(k a d i n) was Aburizal Bakrie. In effect Team 10 became just another vehicle for

Suharto’s patrimonial style and a loyal pool from which to choose senior bureau-

crats and cabinet members. For more information on Team 10 see Schwarz (1994,

118–119) and Winters (1996, 125–141); for further information on Bakrie see

O’Kane (1993).

   10 In its 1991 annual report Freeport-McMoRan did not record a profit on

the original sale because payment for the shares was made in January of the fol-

lowing year, the same year in which 50 percent of the shares were repurchased.

   11 In 1996 what became known as the Busang, or Bre-X, fraud rocked the

foundations of the erstwhile stable Indonesian mining industry and sent shock

waves through the wider international mining community. A year earlier a small

Canadian mining company, Bre-X Minerals Limited, announced that it had found

economically viable gold deposits at its Busang site in East Kalimantan. Over a

period of eighteen months, Bre-X continually reevaluated the gold reserves at the

Busang site until it claimed it had proven reserves of 70 million ounces, valuing

the find at $30 billion. Eventually, Bre-X hinted at the unheard-of possibility of

200 million ounces, which would have made it one of the largest gold deposits in

the world. Before long, Suharto’s golfing partner, Bob Hasan, had realigned the

ownership of the Busang lease on behalf of the president. The original leasehold-

ers were given a 30 percent interest; however, through Nusamba, Suharto took 25

percent of this 30 percent share, the government was given 10 percent, Bre-X was

left with only a 45 percent interest, and Freeport, which was to provide all the

financing for the exploration and be the sole operator, was afforded 15 percent.

The government and Nusamba paid nothing for their interest. Eventually, Busang

was discovered to be nothing but a very elaborate fraud.

   12 Freeport-McMoRan “has agreed that if [Nusamba] defaults on the loan,

[Freeport-McMoRan] will purchase the [PT Indocopper Investama] stock or the

lenders’ interest in the commercial loan for the amount then due” (Freeport-

McMoRan 1997).

   13 “If I failed to arrange meetings with ministers, I had to ring up either Sigit

or Tommy. In running shipping companies, I have received help from Sigit, and

in the automotive business, Tommy has helped me much” (Schwarz 1994, 150).

When Djody failed to carry his share of exploration costs the company confis-

cated his interests.

leith   •   freeport and the suharto regime                                     95

    14 Agus Kartasasmita’s company, PT Catur Yasa, was then given a 20 percent

interest in a Duke-Fluor Daniel venture. Although this joint venture has approx-

imately two hundred employees and Catur Yasa contributes only one employee,

Ginandjar’s brother claims his company was chosen because of its professional-

ism (Waldman 1998).

   15 The Golkar Party was formed by the military during the Sukarno years. It

eventually came under the control of Suharto and by continually “winning” elec-

tions was used by the ex-president to validate his democratic credentials and

control parliament.

    16 The Ok Teki landowners eventually settled out of court in 1996 for

approximately $500 million.

    17 What was most significant for the Amungme, and indeed for Freeport and

all other American transnationals, was that the judge supported previous rulings

that the United States court had jurisdiction to hear a lawsuit brought by a for-

eign person against an American company for alleged wrongful acts committed

outside the United States. Today Tom Beanal sits on Freeport’s Board of Com-

missioners, apparently on behalf of the Amungme.

   18 Transmigration was first introduced by the Dutch in 1905 when they

moved impoverished Javanese peasants to the less-populated areas, supposedly to

allow them to start a new life. In reality Dutch transmigration served primarily to

supply cheap labor to foreign-owned plantations. The Suharto regime’s transmi-

gration policy, which systematically moved large numbers of migrants from the

more crowded islands such as Java and Sulawesi to the outer resource-rich prov-

inces where they were given about two acres of traditional land and supplied with

grain, clean water, and a house, was not dissimilar to the Dutch experiment.

   Until recent years transmigration was successfully promoted internationally as

a socioeconomic program aimed at relieving the population pressure on the

densely populated main islands and received extensive financial support from the

World Bank and multinational groups channeling aid into Indonesia. Yet Jakarta’s

transmigration policy has always concealed hidden agendas.

    Under Suharto transmigration was an integral part of the central government’s

policy of “Indonesianization” and focused on incorporating areas resistant to

Jakarta’s rule, such as East Timor, Aceh, and West Papua. At the same time, as

with Dutch transmigration, Indonesian transmigration has focused on ensuring

a supply of cheap and readily accessible labor to foreign enterprises operating in

the most remote regions of the archipelago. Thus, transmigration had a political

purpose (the control of the indigenous minorities), a cultural purpose (the alien-

ation and destruction of traditional cultures), and an economic purpose (support

for direct foreign investment).

   19 The traditional landowners are a minority within a Papuan minority in the

concession area; Indonesians are by far the largest ethnic group there.

   20 A society member was so supportive of the regime that it was apparently

96                           the contemporary pacific • spring 2002

willing to break United States law. According to the Progressive Magazine, soci-

ety trustee Roy Huffington—who heads the United States oil company Huffco

and has lucrative contracts with Pertamina—was caught illegally shipping torture

equipment to the regime; he was subsequently fined $250,000 by the Department

of Commerce (Press 1997; Shorrock 1996).

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Abstract

In 1967 the transnational mining company Freeport was the first foreign company

to sign a contract after Sukarno was sidelined by Suharto. Eventually, Freeport-

McMoRan Copper and Gold, through its subsidiary PT Freeport Indonesia, came

to operate the biggest gold mine and lowest extraction-price copper mine in the

world in the isolated mountains of the Indonesian province of West Papua. It

also became politically and economically significant to the Suharto regime. In the

absence of the central government, the American mining company became the de

facto developer and administrator of its concession in West Papua while in the

United States it served as an important political lobby group for Jakarta. With

Freeport becoming the largest taxpayer in Indonesia, one of the largest employ-

ers, and eventually running one of the largest socioeconomic programs in the

100                            the contemporary pacific • spring 2002

republic, it was described by Suharto as essential to the nation’s economy. Free-

port’s importance encouraged the development of mutually beneficial and sup-

portive relationships between the company, the Indonesian president, his military,

and the nation’s political elite. In return, Freeport was politically and physically

protected by the regime. Eventually, Freeport’s financing of the president and his

cronies’ interests in the company threatened to see Freeport violating the United

States’ Foreign Corrupt Practices Act.

   Today Freeport’s past relationship with Suharto has made it a high-profile tar-

get for anticorruption reformers in Indonesia. Because of the pivotal economic

role the company continues to play in Jakarta and West Papua, any question of

future independence for the province will be inextricably linked to the company.

k e y wo r d s: corruption, Freeport, Indonesia, mining, Suharto, West Papua

sources: http://scholarspace.manoa.hawaii.edu/bitstream/handle/10125/13611/v14n1-69-10?sequence=2

JFK, Indonesia, CIA and Freeport

November 8, 2011Kaki Five SubangLeave a commentGo to comments

Greetings nationality who insulted,

End of 1996, a great article by Lisa Pease, published in Probe magazine. This paper is also stored in the National Archive in Washington DC. The post title is â € œJFK, Indonesia, CIA and Freeport.

Despite the dominance of Freeport on a mountain of gold in Papua started since 1967, but its action in this country had started several years earlier. In his writings, Lisa Pease get the findings if Freeport Sulphur, thus the name of the company that originally, almost broke into pieces when a change of power in Cuba in 1959.

When was Fidel Castro succeeded in destroying the regime of dictator Batista. By Castro, all foreign firms in the country nationalized. Freeport Sulphur which was just about to make its first shipment of nickel production affected. Tension occurs. According to Lisa Pease, many times the CEO of Freeport Sulphur planned assassination attempts against Castro, but many times also failed.

Amid an environment of uncertainty, in August 1959, Forbes Wilson, who served as Director of the Freeport Sulphur had a meeting with the managing director of East Borneo Company, Jan van Gruisen. During the meeting Gruisen tell if he found a research report on Mount Ersberg (Copper Mountain) in West Irian Jean Jacques Dozy written in 1936 Interestingly, the report has actually been rendered useless and stored for years in the library simply Netherlands . Van Gruisen interested in the research report dusty it and read it.

With fiery, Van Gruisen told leaders Freeport

Sulphur explained that if in addition to its natural beauty, Jean Jacques Dozy also write about the natural wealth that is so abundant. Unlike other regions around the world, then the content of the existing copper seed Mount Ersberg it throughout the body lying on the ground, so it is not hidden in the ground. Hearing this, Wilson is very enthusiastic and immediately travel to West Irian to check the truth of the story. In his mind, if the story of this report is true, then the company will be able to bounce back and survive the bankruptcy that is in sight.

Ginandjar Kartasasmita

For several months, Forbes Wilson carefully surveying

on Mount Ersberg and surrounding areas. This research later

wrote in a book called The Conquest of Cooper Mountain. Wilson

refer to the mountain as the greatest treasure to obtain it does not need to dive again because all the treasure had been spread on the soil surface. From the air, the land of the mountain disekujur overwritten glittering sunlight.

Wilson also obtain findings that nearly drove him mad. because

besides filled with copper ore, the mountain was also filled with ore

gold and silver !! According to Wilson, the mountain should be named GOLD

MOUNTAIN, instead of the Copper Mountain. As a mining expert, Wilson

Freeport would predict if a big profit within three years is back capital. Leaders Freeport Sulphur is also moving quickly. On February 1, 1960, Freeport Sulphur signed a partnership with the East Borneo Company to explore the mountain.

But again, the fact that Freeport Sulphur had almost the same

with ever experienced in Cuba. Changes in the political escalation over West Irian threatens the land. Relations between Indonesia and the Netherlands have started to heat up and Sukarno even fielded troops in West Irian.

Wilson had wanted to ask for help to President John Fitzgerald Kennedy in order to cool down the West Irian. But ironically, even JFK spertinya support Sukarno. Kennedy threatened the Netherlands, will stop Marshall Plan aid if persisting with West Irian. Dutch when it needs fresh funds to help rebuild the country from the ruins of World War II, was forced to relent and withdraw from

West Irian.

Jim Bon Moffet

When it looks like the Dutch do not know if the real Mount Ersberg

contains a lot of gold, not copper. For if only the Dutch know the real facts, then the value received Marshall Plan aid from the United States

There is not nothing compared to the value of gold in the mountains.

The impact of the Dutch attitude to withdraw from the West Irian cause

cooperation agreement with the East Borneo Company returned raw. the leaders

Freeport obviously furious. Moreover, heard Kennedy will prepare a package

economic aid to Indonesia amounting to 11 million USD with the involvement of the IMF and

World Bank. All this clearly must be stopped!

Everything changes one hundred eighty degrees when President Kennedy

was shot dead on November 22, 1963 A lot of people claim the shooting Kennedy is a big conspiracy involving the interests of the Globalists who want to maintain hegemony over political policy in America.

President Johnson, who succeeded Kennedy took the opposite stance

back to its predecessor. Johnson actually reduce economic aid

to Indonesia, except for the military. One of the figures behind

Johnson's success, including the presidential election campaign

1964, is C.Long Augustus, a member of the board of directors Freeport.

Figure this one does have a huge interest over Indonesia. Besides relation to Freeport, Long also led Texaco, which oversees Caltex (a joint venture with Standard Oil of California). Sukarno in 1961 decided a new policy that requires petroleum contracts 60persen profits handed over to the Indonesian government. Caltex as one of the three oil operators in Indonesia clearly was devastated by Sukarno's policies.

Augustus C.Long very angry against Sukarno and very concerned that this man be removed as soon as possible. Maybe a miraculous coincidence. Augustus C.Long also active in the Presbyterian Hospital in NY where he was twice named president (1961-1962). It is no secret that if this place is one meeting point of CIA figures.

Lisa Pease carefully trace the life history of this character. Between 1964 to 1970, Long retired as leader while Texaco. What do people do this in the future which in Indonesia known as the most crucial. Pease get the data if in March 1965, Augustus C.Long elected as Director of Chemical Bank, one of the Rockefellers. Augustus 1965, Long was named a member of the United States presidential intelligence advisory board for foreign affairs. The agency has a very big influence to determine the US covert operations in certain countries. Long believed to be one of those who drafted the coup against Sukarno, who made ​​the United States by moving a number of Army officers who calls the Friend Our Local Army.

One of the evidence of a secret telegram Cinpac 342, January 21, 1965, at 21:48, which states that if the group General Suharto would urge the army to take power without waiting Soekarno absent. Former CIA officer Ralph Mc Gehee also never testified that it was true.

Beginning November 1965, one month after the tragedy of the murder of a number of officers loyal to Sukarno, Forbes Wilson got a call from the Chairman of the Board of Directors of Freeport, Langbourne Williams, who asks if Freeport is ready

explore the mountain of gold in West Irian. Wilson clearly shocked. When it is still valid as president Sukarno of Indonesia and even to 1967, and from which Williams believes a mountain of gold in West Irian will fall into the hands of Freeport?

Lisa Pease get the answer. Freeport officials had already had contact with important figures in the Indonesian elite circles. They are the Minister of Mines and Petroleum Ibn Soetowo and Julius

Tahija. The last person who acts as a liaison between Ibn Soetowo with Freeport. Ibn Soetowo itself is very influential in the army because he was the one who shut down their entire operating budget.

That is why, when Law No. 1/1967 on Foreign Direct Investment (FDI) that the draft was designed in Geneva-Switzerland which dictation Rockefeller, enacted in 1967, the first foreign company to the contract signed Suharto was the Freeport !. This is the first time the newly created mining contracts. If the Soekarno era contracts with foreign companies are always in favor of Indonesia, since Suharto to power, such contracts actually harmful Indonesia.

To build the gold mine construction, Freeport mengandeng Bechtel, US companies that employ many CIA frontman. CIA Director John McCone has a stake in Bechtel, while the former Director of the CIA

Richards Helms worked as an international consultant in 1978.

In 1980, Freeport McMoRan-owned holding Jim Bob Moffett and a giant world with earnings of more than $ 1.5 billion per year.

In 1996, an executive of Freeport-McMoran, George A.Maley, wrote a book called Grasberg setelab 384 pages and describes if a gold mine in West Papua it has the largest deposits in the world, while for copper ore ranks third largest in the world.

Maley writes, the data of 1995 show if stored in this area of copper ore reserves of 40.3 billion dollars and still be profitable next 45 years. Ironically, Maley is proud to also write if costs produks largest gold and copper mine in the world that is in West Irian is the cheapest in the world !!

The term Tembagapura town was actually misleading and wrong. It should EMASPURA. Because the mountain is a mountain of gold, although it also contains copper. Because gold and copper contents were scattered on the ground,

Freeport then stay memungutinya and then new dig very easily. Freeport did not want to lose the gold and build a giant pipes and strong from the Grasberg-Tembagapur a 100 kilometer long straight to the Arafura Sea which has been waiting for big ships that will transport it to the gold and copper America. This is truly a great pillage sanctioned by the Indonesian government until now !!!

The testimony of a CNN reporter allowed to cover the Freeport gold mine area from the air. With helicopter she covered the gold mountain that year 1990s has turned into a deep valley. All gold, silver, and copper are the mountains there had been taken away to America, leaving behind toxic waste that pollutes rivers and lands Papuans who even today still live like in the stone age.

Freeport is the field of illicit money for officials of this country, that of the civilian and military. Since 1967 until now, the largest gold mine in the world it becomes their personal mines to enrich himself and his family. Freeport McMoran alone has budgeted for it that even though the amount is very big for us, but for them is small because the amount of profits from the mine was very powerful. If Indonesia wants to be independent, this is the sector which must be dealt with first.

Sources : http://kakilimasubang.wordpress.com/2011/11/08/jfk-indonesia-cia-dan-freeport/ (Continue)