Friday, February 25, 2005
  A chip off the block?

Jakartass is pleased to have a number of correspondents who email me rather than leaving comments. Today I welcome M., a one-time colleague but now more fruitfully employed in a major financial company in town. He also supports AFC Wimbledon which was established by genuine, community minded football fans.

Hi Jakartass.

I'm sure you've been following the Adiguna murder story. (The trial started yesterday.) A guy in my office knows someone in the family, and he tells me they own over 300 luxury houses in Jakarta alone, as well as the Hilton. The contempt this nation has for its poor never fails to amaze me.

I like your blog, but don't share your unbridled optimism at all. Things are not getting better. Corruption IS Indonesia. What are the reforms on nationality law since Suharto's demise? Sweet FA. And you think SBY's clean? He's a Suharto man through and through. His kids study overseas and he has a multi billion rupiah luxury house and many luxury cars. On an army general's salary of Rp.3 million a month, that would be difficult.

Enjoy the Bintangs ...


I've never suggested that SBY is a 'Mr. Clean.' He could not have become President without massive financial back up or the support of major military players. However, if he is to leave a legacy, then he has to bend with the forces of reformasi. Eradicating corruption is also the key to the regeneration of Indonesia's economy.

And for a Chinese perspective on the illegal trade in merbau wood, check out Angry Chinese Blogger. (Thanks to the latest round up of Asian Blogs from Simon's World.)

The iniquitous nationality laws are another issue which we expats with Indonesian partners have major problems with. This is a subject which Jakartass will have to return to another day.

Finally, yes, I do like Bintang beer, but any of the following list of c.6,000 British-style ales would be preferable.

The following article was published in the New Internationalist in October 1982. Ibnu Sutowo, who died aged 86 on January 12th 2001, sired Adiguna. Like father like son?

Ibnu Sutowo: the 'notorious corruptor'

Corruption is a way of life in Indonesia. There is nothing furtive about it, as there is in the West. And even if your corruption lands your nation in economic trouble, you can get away with it - as long as you know the right people. Ibnu Sutowo does.

It wasn't as if Ibnu Sutowo didn't have presidential approval to line his own pockets and those of relatives and friends. Back in the early sixties, when Sukarno had appointed him supervisor of the newly-established national oil industry, the story goes that a politician reminded his president that Ibnu Sutowo was a 'notorious corruptor'.

President Sukarno is said to have replied: I know that, but as long as he can provide the state's coffers with 10 million American dollars I will allow him to steal for himself one million American dollars.' Sukarno believed America had become rich through its gangsters because 'corruptors are inventive'. Indonesia, he said, needs inventive people.

There's no doubt Ibnu Sutowo is inventive. By the time he was sacked in 1975, when even the smokescreen he had set up to hide Pertamina's difficulties could no longer conceal the extent of the damage to the national economy, he was comfortably cushioned by a vast array of other business interests.

The Indonesia Documentation and Information Centre (INDOC), based in Leiden, Holland, provides this list of Sutowo interests: motor-cycle and vehicle imports; assembly and distribution agencies including Mitsubishi, Toyota, Daihatsu, Mercedes, National Motors and Chrysler: Westinghouse electrical goods; cement and steel construction; shipyards: real estate: and livestock and fertilizers.

Not only was Ibnu Sutowo's accumulation of wealth questionable, said INDOC: it was not even being invested in productive areas. Instead, he was spending it on luxury living and land and speculating abroad.

That the Pertamina chief and his top men were siphoning off revenue was no secret But the government didn't seem to mind as long as Pertamina maintained a satisfactory flow of cash into consolidated revenue. After all, Ibnu Suwoto's oil empire was not the only one in Indonesia to be built on nepotism and military patronage.

Among Ibnu Sutowo's closest friends was the president's wife, Mrs Tien Suharto, known widely as Madame Tien Per Cent, whose 'benevolence' and 'foundation' work continues to flourish in Jakarta. Ibnu Sutowo, careful to stay on good terms with contacts in high government and military circles, was able to find money to 'subsidize' a wide variety of projects suggested by fellow generals approaching retirement.

Soon Ibnu Sutowo was branching off into other areas on behalf of Pertamina ~ civil aviation, office blocks, hotels, tourism.

Occasionally he even spent Pertamina money on projects which could have some benefit for the Indonesian people as a whole: there were natural gas developments in East Kalimantan and South Sumatra, and a steel plant in West Java.

Ibnu Sutowo's big mistake came in 1973 when the OPEC countries flexed their oil muscles. With the promise of oil leaping from $4 to $11 a barrel, he suffered a rush of blood to the head. To finance Pertamina's diversification programme, he launched himself into an orgy of short-term borrowing. Soon Pertamina faced a due bill of $2 billion at a time when oil revenues had failed miserably to meet expectations.

In desperation. Pertamina's boss turned to the Middle East for long-term money to meet short-term bills. Ibnu Sutowo thought he had pulled off a rescue act but then the deal fell through. American creditors, beginning to turn the thumbscrews, were soon abetted by London banks.

Almost overnight. Indonesia's image as a model of stability and solvency dissolved. Rough calculations at the time, by various accounting formulae, indicated that Pertamina's activities had landed Indonesia $I billion in debt.

Ibnu Sutowo, though remaining nominally in charge, handed over the running of Pertamina to the government which, in turn, was forced to hand over its management to foreign financiers willing to bail Jakarta out.

But Suharto could not just sack the man who had for so many years provided him, the country's first lady and many generals with extravagant amounts of extra income derived from corruption. An instant dismissal of the man who for so many years has been regarded as Indonesia's financial wizard could quite easily shake the position of the Suharto government.

Enemies of Ibnu Sutowo demanded that the government get back the money he had in Switzerland and other countries 'because the money has been stolen from the people'. There was talk of him having $4 billion outside the country.

It was not until March 3. 1976. That Suharto was able to 'honourably' discharge Ibnu Sutowo and seven other directors of Pertamina. Ibnu Sutowo left soon afterward for the United States, where presumably he still had friends, but it was not long before he was back in Indonesia looking not the slightest down at heel.

In July last year, when Vice President Adam Malik's daughter was married at the presidential palace at Bogor, Lieutenant General Ibnu Sutowo, that 'notorious corruptor', was among the honourable guests.

Cynics in Jakarta suggest it was Ibnu Sutowo's detailed knowledge of corruption among the city's élite which ensured that he was 'cleared' by the inquiries which followed the Pertamina scandal.

Occasionally his name has surfaced. When he was in the US. an oil tanker owner filed a suit against him in New York over the loss of a vessel. But nothing came of that. And in Singapore a court hearing drags on in which the widow of Ibnu Sutowo's right hand man. Waji Tahir. is looking for the missing $30 million which she says was her husband's share of the Pertamina action. While the trial proceeds at snail's pace. Indonesian defence department officials are being accused of pressuring her to withdraw the case.

Meanwhile, the 70-year-old general goes his merry millionaire's way, making money with the flair that nearly brought Indonesia to its knees.


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