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.