Indonesian
officials say they can't find evidence of ill-gotten wealth. But a four-month
TIME investigation reveals that the former President and his children now have
assets worth $15 billion, including fancy homes, jewelry, fine art and private
jets
The Family
Firm
A TIME
investigation into the wealth of Indonesia's Suharto and his children uncovers
a $15 billion fortune in cash, property, art, jewelry and jets
By JOHN
COLMEY and DAVID LIEBHOLD Jakarta
When the end came for Suharto, Indonesia's long-serving President appeared oddly passive. As students and angry mobs took to the streets and soldiers responded with gunfire and tear gas, the five-star general hovered in the background, making few attempts to set things right. When he finally quit a year ago this week, he stood meekly to the side as his successor, B.J. Habibie, took the oath of office. Suharto has hardly been heard from since.
But Indonesia's onetime autocrat has been far busier than most of his countrymen realize. Just after his fall from power there began feverish movements of his personal fortune. In July 1998, reports emerged that a staggering sum of money linked to Indonesia had been shifted from a bank in Switzerland to another in Austria, now considered a safer haven for hush-hush deposits. The transfer caught the attention of the United States Treasury, which tracks such movements, and set in motion diplomatic inquiries in Vienna. Now, as part of a four-month investigation that covered 11 countries, TIME has learned that $9 billion of Suharto money was transferred from Switzerland to a nominee bank account in Austria. Not bad for a man whose presidential salary was $1,764 a month when he left office. (Suharto, for his part, denies that he has any bank deposits abroad and insists that his wealth amounts to a mere 19 hectares of land in Indonesia, plus $2.4 million in savings.)
Those billions are just part of the Suharto wealth. Though the Asian financial crisis has trimmed the family empire considerably, the former President and his children retain a staggering fortune. It was built over three decades from a skein of companies, monopolies and control over vast sectors of economic activity in Indonesia--from oil exports to humble pilgrims making the yearly visit to Mecca. (They flew on planes leased from companies controlled by Suharto's children.) According to data from the National Land Agency and Properti Indonesia magazine, the Suharto family on its own or through corporate entities controls some 3.6 million hectares of real estate in Indonesia, an area larger than Belgium. That includes 100,000 sq m of prime office space in Jakarta and nearly 40% of the entire province of East Timor.
Within Indonesia, the six Suharto offspring have significant equity in at least 564 companies, and their overseas interests include hundreds of other firms, scattered from the U.S. to Uzbekistan, the Netherlands, Nigeria and Vanuatu. The Suhartos also possess plenty of the trappings of wealth. In addition to a $4 million hunting ranch in New Zealand and a half-share in a $4 million yacht moored outside Darwin, Australia, youngest son Hutomo Mandala Putra (nicknamed Tommy) owns a 75% stake in an 18-hole golf course with 22 luxury apartments in Ascot, England. Bambang Trihatmodjo, Suharto's second son, has an $8 million penthouse in Singapore and a $12 million mansion in an exclusive neighborhood of Los Angeles, two doors down from rock star Rod Stewart and just up the street from his brother Sigit Harjoyudanto's $9 million home. Eldest daughter Siti Hardiyanti Rukmana may have sold her Boeing 747-200 jumbo jet, but the family's fleet of planes included, at least until recently, a DC-10, a blue-and-red Boeing 737, a Canadian Challenger 601 and a BAC-111. The latter once belonged to the Royal Squadron of Britain's Queen Elizabeth II, according to Dudi Sudibyo, managing editor of Indonesia's Angkasa aerospace magazine.
Neither Suharto nor his six children responded to requests for interviews, though lawyers for the former President and son Bambang asserted that their clients did nothing illegal. Indeed, no one has proven that the Suhartos broke any laws. Their companies mostly consist of operating entities that turn profits, create jobs and import Western technology. Yet allegations that the former First Family benefited from favoritism, commonly heard in Indonesia since the early 1980s, began to grow louder when the former President resigned. His successor quickly announced an official investigation into such charges. Tommy, the youngest son whose corporate empire at one point included the Lamborghini sports car company, is already in legal jeopardy, facing charges of defrauding a state agency of $11 million in a real estate deal. The South Jakarta district court recently rejected a plea from Tommy's lawyers that he be tried in a civil court and is proceeding with a criminal trial.
In an interview at the State Palace, Habibie told TIME he will not cover up for his former mentor, but he has so far declined to freeze the family's holdings or to follow up on the investigation in any meaningful way. Private asset-tracing firms are excited at the prospect of a Suharto treasure hunt, if only Jakarta would hire them. "In terms of dollars, we think this could be bigger than anything we have ever seen before," says Stephen Vickers, Asia chief for Kroll Associates, which helped investigate the wealth of the Philippines' former President Ferdinand Marcos. "My bags are packed."
The search won't start in earnest unless the man in charge of the government's investigation, Attorney General Andi Muhammad Ghalib, gives the go-ahead. Ghalib, a three-star general in the Indonesian military, told TIME that he has found no evidence that his former supreme commander wrongly acquired state assets. But Ghalib has been moving slowly, and some of his own staff members are not convinced the investigation is serious. In the opinion of an official in the Attorney General's office, "Ghalib is on a mission to protect Suharto."
Nonetheless, the code of secrecy shielding the family is breaking down. After hundreds of interviews with former and current Suharto friends and government officials, business associates, lawyers, accountants, bankers and relatives, as well as examinations of dozens of documents (including bank records of outstanding loans), TIME correspondents found indications that at least $73 billion passed through the family's hands between 1966 and last year. Much of that was from the mining, timber, commodities and petroleum industries. Bad investments and Indonesia's financial crisis have reduced the sum substantially. But evidence indicates that Suharto and his six children still have a conservatively estimated $15 billion in cash, shares, corporate assets, real estate, jewelry and fine art--including works by Indonesian masters Affandi and Basoeki Abdullah in the collection of Siti Hediati Hariyadi, the middle daughter known as "Titiek."
Suharto laid the foundation for the family fortune by establishing the intricate nationwide system of patronage that kept him in power for 32 years. His children, in turn, parlayed their ties to the President into the role of middlemen for government purchases and sales of oil products, plastics, arms, airplane parts and petrochemicals. They held monopolies on the distribution and import of major commodities. They obtained low-interest loans by colluding with or even strong-arming bankers, who were often afraid to ask for repayment. Subarjo Joyosumarto, managing director of Bank Indonesia, the central bank, confirms that during the time of Suharto, "there was an environment that made it difficult for the state banks to refuse them."
While the Indonesian economy was growing fast, it was possible to make light of the Suhartos' rent-seeking ways. Now, with half the population below the poverty line as a result of the financial crash, there is little doubt that the family grew wealthy at the expense of the nation. A former business associate of the children estimates that they skipped tax payments of between $2.5 billion and $10 billion on commissions alone. "It is very likely that none of the Suharto companies has ever paid more than 10% of its real tax obligations," says Teten Masduki, an executive member of Indonesian Corruption Watch, an anti-graft non-governmental organization. "Can you imagine how much revenue has been forgone?"
Many Indonesians also blame Suharto for creating a climate of corruption that pervaded the entire economy. The World Bank estimates that as much as 30% of Indonesia's development budget over two decades disappeared through civil-service-wide corruption that filtered down from the top. "If you don't pay bribes, people think you're odd," says Edwin Soeryadjaya, a director of an Indonesian-U.S. telecommunications joint venture. "It's very sad. I cannot say that I'm proud to be an Indonesian. This is one of the most corrupt countries in the world."
GREAT
EXPECTATIONS
How did
Suharto Inc. attain its wealth, its power and its hold over the imaginations of
millions of Indonesians? When Suharto became acting President of Indonesia in
1967, his unique blend of forcefulness and Javanese political subtlety was already
manifest. The ousting of "President for Life" Sukarno, the
nationalist founder of the country, took two years and, through an accompanying
anti-communist purge, claimed as many as 500,000 lives. But Suharto, an obscure
general from a hardscrabble village in central Java, led an outwardly modest
life. He and his late wife Siti Hartinah ("Madam Tien") initially
lived in a simple bungalow in the Menteng district of Jakarta and drove a 1964
Ford Galaxy. That was in marked contrast to Sukarno, the self-styled
"God-King," with his grand presidential palace and his glamorous
third wife Dewi, a former Japanese hostess at Tokyo's Copacabana nightclub.
Behind the
facade, however, Suharto showed an early interest in making money. In the
1950s, he was allegedly involved in sugar smuggling and other extra-military
activities in Central Java that may have cost him command of the Army's
Diponegoro Division during a 1959 anti-corruption drive. In his autobiography,
Suharto asserts that he bartered sugar for rice to ease a local food shortage
and that he did not benefit personally. In any case, the military transferred
Suharto to a less influential position at the army staff college in Bandung,
West Java.
In 1966,
Suharto Inc. began to take shape. Before being officially named President,
Suharto issued Decree No. 8 to seize two Sukarno-controlled conglomerates with
combined assets of $2 billion. They became PT Pilot Project Berdikari, a
company that Suharto placed under the management of Achmad Tirtosudiro, a former
general who now heads a powerful Muslim organization founded by President
Habibie. The firm was to become one of the main levers of the Suharto empire.
The
President's fortunes began to soar along with those of a few close associates,
most prominently Liem Sioe Liong and The Kian Seng, better known as Mohammad
"Bob" Hasan. In late 1969, Suharto gave a partial monopoly--it later
became total--over the import, milling and distribution of wheat and flour to
PT Bogasari Flour Mills, controlled by Liem's Salim Group. Over the years
Liem--known as "Uncle Liem" to the Suharto brood--and Hasan became
Suharto's most trusted non-family associates and eventually amassed vast
commercial empires.
The bedrock
of the Suharto fortune was the presidential yayasan, or foundation. Dozens were
set up, ostensibly as charities, and they have in fact funded a large number of
hospitals, schools and mosques. But the foundations were also giant slush funds
for the investment projects of the Suhartos and their cronies, as well as for
the ex-President's political machine, Golkar. According to George Aditjondro, a
sociology lecturer at Australia's University of Newcastle, they ultimately
numbered 97 and were controlled by Suharto, his wife (who died in 1996), her
relatives in the countryside, his cousin and half-brother, the six children,
their spouses and parents, trusted military men and associates such as Habibie,
Hasan and Liem. "The foundations bought stocks, built companies, lent
money to businessmen," says Adnan Buyung Nasution, a lawyer who last year
tried unsuccessfully to set up an independent commission on the Suharto wealth.
The
foundations accepted "donations," though they were often less than
voluntary. Beginning in 1978, all state-owned banks were required to give 2.5%
of their profits to both the Dharmais and Supersemar foundations, according to
former Attorney General Soedjono Atmonegoro. Suharto's Decree No. 92, in 1996,
required that each taxpayer and company making more than $40,000 a year donate
2% of income to the Dana Sejahtera Mandiri foundation, set up to support
poverty-alleviation programs (the order was rescinded last July). To this day,
civil servants and members of the military donate a portion of their monthly
salaries to the Amal Bakti Muslim Pancasila foundation, which was used by
Suharto to win Muslim support.
While
"donations" provided most of the foundations' revenue, there were
other sources as well. In 1978, Suharto foundations took control of 60% of Bank
Duta, a leading private bank, according to a former Bank Duta official. That
share was gradually increased to 87%. The foundations invested heavily in
private companies established by Suharto family members and cronies. After
that, a helpful ministry or state-owned firm would award a contract or a
monopoly to those companies.
Since
Suharto's downfall, the foundations have been a major target of Indonesian
investigators. Soon after Suharto's resignation, then-Attorney General Soedjono
examined the books of the four largest yayasan. What he found was unsettling.
"These foundations were set up to deliver social services," he says,
"but Suharto had distributed the money to his children and friends."
Soedjono discovered that one of the largest foundations, Supersemar, had
dispersed 84% of its funds on unauthorized pursuits, including loans to
companies owned by Suharto's children and friends. Suharto, as chairman, had to
sign any check over $50,000. Soedjono submitted a preliminary report on his
findings to President Habibie last June. He was fired five hours later. (The
President says Soedjono was dismissed because he stepped outside the line of
command on another matter.)
OIL
AND LAND
The Suharto
reach extended well beyond the foundations' interests, and few deals were more
lucrative than the family's oil businesses. In his first decade in power,
Suharto allowed state oil conglomerate Pertamina to be run as a private fief by
its founder Ibnu Sutowo, a former general once known as the second most
powerful man in Indonesia. Sutowo's plan to build a huge tanker fleet for
Pertamina brought it to the brink of financial collapse in 1975. He was fired
the following year, though it wasn't clear whether the cause was mismanagement
or his political ambitions. Now 84, Sutowo tells TIME it was neither. He says
Suharto asked him in 1976 to set up a second trading company to ship Indonesian
crude oil to Japan. "He said to me, 'I want you to take $0.10 for every
barrel traded by the new company,'" Sutowo recalls. "When I said no,
I think he was shocked."
After Sutowo
was fired, Pertamina eventually imported and exported much of its oil through
Perta Oil Marketing and Permindo Oil Trading, two small companies in which
Tommy and older brother Bambang acquired significant stakes in the mid-1980s.
According to a senior official in Habibie's government, the firms received a
commission of $0.30 to $0.35 a barrel. In the 1997-98 fiscal year, the two
companies handled an average of 500,000 barrels a day, for yearly commissions
of more than $50 million. Says former Mines and Energy Minister Subroto:
"Pertamina could have exported directly. There was no need for these
companies."
In addition,
a former business associate of Tommy and Bambang says there were extra,
unofficial markups on oil exports and imports that earned the firms as much as
$200 million a year in the 1980s, when prices were high, and about half that in
the 1990s. Suharto family companies received Pertamina's contracts for
insurance, security, food supplies and other services--a total of 170 contracts
in all. Last year, shortly after Suharto's fall, Pertamina canceled many of
them and announced instant savings of $99 million a year. Says the former
associate of the Suharto scions: "They milked Pertamina like a cow."
One major
Suharto money spinner was PT Nusantara Ampera Bakti, or Nusamba, which was
launched with $1.5 billion in 1981 by three of the foundations, together with
Bob Hasan and Suharto's eldest son Sigit (who held 10% each). The firm became a
sprawling conglomerate with more than 30 subsidiaries in finance, energy, pulp
and paper, metal and automobiles. Nusamba's jewel was a 4.7% share in Freeport
Indonesia, an American-controlled company that runs the world's largest gold
mine in the province of Irian Jaya. In 1992 the foundations apparently
transferred their 80% share to Hasan, though it is not clear how much he paid
for it. So far, government investigators have not asked to see Nusamba's books.
Says Otto Cornelis Kaligis, head of Suharto's eight-member legal team:
"When you talk about Nusamba you have to ask Bob Hasan. In the
investigation of President Suharto, the Attorney General never asked any
questions about Nusamba."
The family
profited not only by winning concessions from the government but occasionally
by disrupting the lives of individual Indonesians who stood in the way. When
Suharto wanted to build a cattle ranch getaway in West Java in 1973, he
displaced the inhabitants of five villages spread over 751 hectares. According
to official records, he paid a total of $5,243 in compensation. Some villagers
say they got nothing. Muhammad Hasanuddin, who was a boy at the time, remembers
when his family's two-hectare rice farm was lost. "We saw the fat cows,
herded by dozens of men pompously riding on horseback, trampling our ruined
fields. The whole family could only cry." Hasanuddin's father ended up as
a pedicab driver in Jakarta.
Similar
stories abound. In 1996, a company owned by Tommy forced villagers off their
land in Bali to build a 650-hectare resort. The firm had a permit for only 130
hectares, which it illegally expanded, according to Sonny Qodri, chairman of
Bali's Legal Aid Institute. Residents who refused to sign an agreement to sell
their land were intimidated, beaten and sometimes put in a pond up to their
necks. Two were brought to court and jailed for six months. Nothing remains of
the project now: recession hit just as the bulldozers were moving in.
Hasan Basri
Durin, chairman of the National Land Agency and Minister of Land Affairs, says
the Suharto family typically paid peanuts for the property it acquired--the
average was 6% of market value--and reluctant sellers often changed their minds
after visits from thugs or soldiers. "Sometimes they didn't pay one
cent," says Hasan. "But it's legal because they [the Suhartos] have
the documents." Only about half of Indonesia's farmers hold a registered
title to their land, so proving ownership can be difficult--and proving
intimidation even harder. As a result, few have come forward to complain.
CHILDREN
OF FORTUNE
For years,
Indonesia's corruption was the kind of petty favor-buying and commission-giving
commonly found in the developing world. Two factors pushed the country into a
league of its own. The first was Indonesia's position as an up-and-coming star
performer in the Asian economic miracle, which brought a cascade of funds
pouring into businesses and real estate. The World Bank estimates that between
1988 and 1996, Indonesia received more than $130 billion in foreign investment.
"All this has been possible under the eyes of the West, which supported
Suharto for 30 years," says Carel Mohn, spokesperson for Transparency
International, a non-governmental organization based in Berlin.
The second
factor was "the children," as the Suharto kids are known. All six are
involved in business, a calling for which they were groomed from an early age.
"I remember when we were younger, me and Bambang and his other friends
would go over to Uncle Liem's house," says a childhood pal of Suharto's
second son. "Uncle Liem would always give us a package of money wrapped in
newspaper." The package, he recalls, would contain banknotes worth $1,000
or more. Says Wati Abdulgani, a businesswoman who dealt with a family company
in the 1980s: "The kids saw what was being given to their uncles and they
thought, 'What about us, when we grow up?'"
Sigit, the
eldest son, was apparently pushed into business by his mother, Madam Tien,
whose own behind-the-scenes dealings in the 1970s earned her the nickname
"Madam Tien Percent." A friend of Mrs. Suharto recalls a conversation
with her at the time the government was building Jakarta's Soekarno-Hatta
International Airport. "She told me, 'I want Sigit to learn about
business,'" says the friend. "I told her I thought he should first
finish university. She said, 'No, no, Sigit can't think straight.'" Two
sources who worked on the airport project say that by the time both terminals
were finished in 1984, $78.2 million had been given to Sigit in markups that
appeared as cost overruns. He graduated to bigger deals. The collection of
ticket proceeds from a national lottery, set up in 1988 by the Department of
Social Affairs, was handled by a Sigit-linked company until Muslim leaders'
anti-gambling protests forced its closure in 1993. "The gambling scheme
earned Sigit and his company millions of dollars every week," says
Christianto Wibisono of the Indonesian Business Data Center, which has been
gathering information on Suharto-related businesses and other firms since 1980.
Second son
Bambang, who founded the Bimantara Group in 1981 with two members of his former
rock band, was helped in business by Uncle Liem. From 1967 until last year, the
National Logistics Agency (Bulog) imported and distributed basic commodities
such as wheat, sugar, soybeans and rice through Suharto-linked companies,
including six belonging to Liem. At Bambang's request, Liem gave him a slice of
the business. Through sugar trading alone, the son is estimated to have earned
as much as $70 million a year, essentially for stamping documents. The system
worked so well that each of the children was given a cut as he or she moved
into business, a practice that continued until last year. From 1997 to '98,
Liem had a contract from Bulog to import about 2 million tons of rice valued at
$657 million. As part of that contract, Suharto's youngest daughter Siti Hutami
Endang Adiningsih ("Mamiek") imported 300,000 tons of rice worth
$90.3 million. Over the past 18 years, under the pretense of stabilizing food
prices, the Suhartos' deals with Bulog have earned them an estimated $3 billion
to $5 billion, according to a former government official.
Eldest child
Tutut rose to become the queen bee of the Suharto clan. The base of her empire
is Citra Lamtoro Gung Group, and its first big business was building and
operating toll roads. The group's toll-road arm won its first project in 1987
after the government turned down two competing bids. Financing came from two
government banks, a state-owned cement company and a Suharto foundation. When
the president of state-owned Bank Bumi Daya turned down Tutut's request for an
interest-free loan, he was fired. By the mid-1990s, her roads were earning
$210,000 a day, and in 1995 the concession on her Intra Urban Tollway System,
the most lucrative in Indonesia, was extended through the year 2024. Explains
Teddy Kharsadi, director of corporate affairs at toll-road company PT Citra
Marga Nusaphala: "The extension was a reasonable consequence of our
investment."
Tutut's
empire also includes telecommunications, banking, plantations, flour milling,
construction, forestry, sugar-refining and trading. Foreign companies learned
to take on a Suharto as a partner if they wanted to do business in Indonesia,
and Tutut was first on most lists. "A lot of big multinationals insisted
on having the right connections, and these were certainly useful to them,"
says Graeme Robertson, an Australian-born Indonesian citizen whose Swabara
Group is active in coal and gold mining. At the peak of Tutut's power,
according to sources close to the family, investors seeking to meet her first
had to pay as much as $50,000 as a "consulting fee" to her minders.
In the early
1990s, Indonesia began to heed the advice of market-oriented economists to
privatize many of its state firms. The First Family was a major beneficiary.
Suharto ended the state telecommunications monopoly in 1993--by giving licenses
for an international direct-dial operation and for Indonesia's first digital
mobile phone network to Bambang's PT Satelit Palapa Indonesia (Satelindo). At
the same time, state-owned PT Telkom transferred its customer base to Satelindo
when it launched its own satellite, the country's third, with the help of a $120
million loan from the U.S. Export-Import Bank. TIME has learned that Jakarta
gave Satelindo the licenses and Telkom's customers without a tender or payment.
Thanks to the government, Bambang found himself in control of the company,
which the market valued at $2.3 billion in 1995 when a subsidiary of Germany's
Deutsche Telekom paid $586 million for a 25% stake. Bambang also received a
major share of a $90 million facilitation fee from Deutsche Telekom as part of
the sale.
TOO
MUCH OF A GOOD THING
The Suharto
children's interests became so extensive they started colliding with each
other. Bambang and Tutut vied to set up their own television stations. Tommy
competed with brother Sigit in aviation and with Bambang in shipping and car
production. In 1990 the government solicited bids for a contract to provide
switching equipment for 350,000 telephone lines. Japan's NEC teamed up with a
company controlled by Bambang. Competitor AT&T gave Tutut a 25% share in
its local venture, now called PT Lucent Technologies Indonesia. The project was
ultimately split 50-50 between Tutut's AT&T group and Bambang's NEC. In
1996, Tutut came up against Sigit for rights to develop the vast Busang gold
mine in East Kalimantan. Tutut's partner, Canadian company Barrick Gold, was
opposed by Sigit's partner, Bre-X Minerals. This time, both sides lost; Busang
turned out to be the biggest hoax in mining history.
The
competition grew so intense that the Suharto progeny began seeking monopolies
in ever-narrower lines of business. Bambang got a contract to import the
special paper used by the national mint. Tutut took over the processing of
drivers' licenses. A company owned by Sigit's wife, Elsye, became the sole
authorized producer of Indonesia's mandatory identification cards. In 1996
Suharto grandson Ari Sigit devised a scheme to sell $0.25 revenue stickers as
proof of tax payment for every bottle of beer and alcohol consumed in Indonesia
(that business collapsed when producers stopped shipping beer to tourist mecca
Bali in protest). Nine months before Suharto's resignation, Ari was gearing up
to launch a "national shoe project"--all Indonesian children would
have to buy school shoes from his company. "At the end," says an
American lawyer with 20 years' experience in Indonesia, "the only thing
that was transparent was the corruption."
When the
Suharto regime fell, the children used their influence to extricate themselves
from ailing businesses and debts. In April 1994, Tommy launched the Goro
supermarket chain with two of his companies and the Central Village
Cooperative, a large, government-run farmers' organization. Together they
borrowed more than $100 million in loans, according to Bank Bumi Daya records.
No repayments were ever made on the loans. On May 4, 1998, Tommy sold his
shares to the farmers and their cooperative for $112 million in cash, saddling
them with the entire debt. "The children were very wild," says Ibnu
Hartomo, younger brother of Madam Tien. "It seems that they have forgotten
about ethics." Angry mobs burned down one Goro store in south Jakarta
during riots in May 1998, a week before Suharto resigned.
Though much
of the Suharto fortune has been lost through mismanagement and the country's
economic collapse--Tommy's PT Sempati Air, for instance, went bust in 1998--the
family still has many viable businesses. One of many small examples: Sigit's PT
Panutan Selaras produces 25% of the "premix" high-octane gasoline
used in Indonesian cars and owns 22 filling stations in Jakarta, Surabaya and
Central Java. Tommy's PT Humpuss Trading, meanwhile, is also producing the
high-end gasoline.
And then
there's real estate. While prices have plunged in Indonesia, the family's
property holdings are today worth $1 billion, and many--including rubber and
sugar plantations, malls and hotels--continue to bring in revenue. In the
mid-1980s, Bambang paid the government $700 per sq m for a plot of land in
central Jakarta on which now sits the Grand Hyatt Hotel, the prime asset of his
publicly listed PT Plaza Indonesia Realty. In Bali, the children ended up with
some of the most lucrative gems of the tourist industry: Bali Cliff Hotel
(Sigit), Sheraton Nusa Indah Resort (Bambang), Sheraton Laguna Nusa Dua
(Bambang), Bali Intercontinental Resort (Bambang, until two months ago), Nikko
Royal Hotel (Sigit, until six months ago), the Four Seasons Resort in Jimbaran
(Tommy) and the Bali Golf and Country Club in Nusa Dua (Tommy). Tutut and Tommy
bought the land under Jakarta's National Police Headquarters for a fifth of its
market value. Minister of Forestry Muslimin Nasution says 4.5 million hectares
of forest and plantation land is connected to the Suharto children. Observes
Melbourne-based economist Michael Backman, who has written about the Suhartos
in his book Asian Eclipse: Exploring the Dark Side of Business in Asia:
"Anyone who says the family businesses are broke has got it wrong. They
still have shares in timber, oil palm plantations and hotels, all of which are
big dollar earners."
THE
WHEELS OF JUSTICE
Suharto
continues to insist that his assets are modest and located entirely in
Indonesia. "He told me, 'I don't have one cent abroad,'" says
Kaligis, his top lawyer. "If anyone is found to have set up an account in
his name overseas, he has instructed me to launch a lawsuit against them."
Since Suharto resigned, son Bambang and his family have been spending time in
Los Angeles; Titiek has been in Boston, where her son goes to high school. The
rest of the Suhartos live most of the year in Indonesia. Sigit spends hours on
his favorite Versace couch (no one else is allowed to sit on it), playing video
games and watching tapes of Javanese shadow puppet performances.
But the
wheels of justice have barely started moving. Attorney General Ghalib says
Suharto has handed over to the government seven foundations with $690 million
in assets. Members of Ghalib's own staff, however, say Suharto continues to
control those holdings and that the foundations are worth far more than that.
Three of the foundations together have an 87% stake in Bank Duta, which had
assets of $1 billion in 1990. Yet in investigating the foundations, Ghalib has
not gone beyond their printed records, which he has turned over to a state
auditing board for analysis. Says Ghalib's predecessor Soedjono: "This
investigation isn't going anywhere."
The ongoing
reform of Indonesia's banking sector also seems to be helping Suharto family
members and associates cover up their debt obligations. Last October, the
government announced a plan to merge four state banks--with a total of $11.5
billion in nonperforming loans--into one. The six Suharto children and several
companies affiliated with them are listed by the government as owing $800
million in bad debts to the four banks. The amount may well be understated:
between them, Bambang and Tommy have $635 million in bad loans from just one of
the four, Bank Bumi Daya. An official with the bank says that its accounts were
falsely reported to the government, including $172 million lent to Hashim
Djojohadikusumo, Titiek's brother-in-law, to buy stock in another bank.
Borrowing money to purchase bank shares is illegal in Indonesia. Asked to
respond, Hashim's office said he was too busy for an interview. When TIME
informed Habibie of the loan, the President immediately began looking into it.
A genuine
investigation into the Suharto booty will probably have to await the next
government. A parliamentary election scheduled for June 7, to be followed by a
presidential vote in November, could change the political equation
substantially. Two leading presidential candidates, Amien Rais and Abdurrahman
Wahid, say they would order a trial for Suharto, probably followed by a pardon
if he returns ill-gotten gains. Megawati Sukarnoputri, daughter of founding
President Sukarno and herself a presidential candidate, hasn't made her stand
clear. Some analysts think she will leave Suharto alone, out of gratitude for
his not imprisoning her father.
The children,
however, could be in for rougher treatment. "As long as their father is
alive," says a Suharto family friend, "he can probably protect them.
After he's gone, they're going to have to run." Three of the six children
have homes in the U.S., so prosecutors there could go after them under tough
new laws aimed at corruption and money laundering. Bambang, meanwhile, controls
two U.S.-listed companies, which could be subject to investigation under the
Foreign Corrupt Practices Act.
Suharto
himself has at least one strong legal shield: the presidential decrees that
laid the foundation for Suharto Inc. Former Finance Minister Mar'ie Muhammad's
anti-corruption watchdog, the Indonesian Transparency Society, has labeled as
illegal 79 of the 528 such orders issued between 1993 and May 21, 1998. Yet
Suharto was careful to have each decree approved by his rubber-stamp
parliament, usually at the end of his five-year presidential terms. Moreover,
notes Juan Felix Tampubolon, one of Suharto's lawyers, Indonesia has a statute
of limitations on most offenses: "For every crime he committed, if any,
before 1981, the right to prosecute has expired under the statutory
period." For Suharto of Indonesia, that--along with $9 billion in an
Austrian bank-- should offer considerable comfort in retirement.
With
reporting by Zamira Loebis, Jason Tedjasukmana and Lisa Rose Weaver/Jakarta,
Laird Harrison/Los Angeles, Isabella Ng/Hong Kong, Kate Noble/London and other
bureaus
A
Talent for Business
Cash and
assets acquired by the family over 30 years
The
Suharto Children
Siti Hardiyanti Rukmana
"Tutut"
Age: 50
Estimated
wealth: $700 million
Major
holdings: Citra Lamtoro Gung Group, with interests in more than 90 companies
ranging from telecommunications to infrastructure, including tollway projects
in Indonesia and the Philippines
Property:
12-room, $1 million house with tennis court and heated pool near Boston; house
on London's Hyde Park Square
Last sighted:
Requesting a hike in tollway rates from Indonesia's parliament
Operating
style: Politically ambitious, Tutut ascended to the level of Minister of Social
Affairs in her father's last cabinet. Got her start in business at age 25, when
"Uncle" Liem Sioe Liong gave her 14% of BCA, the country's largest
private bank. She has also adopted her nephew Ari Sigit's out-of-wedlock
daughter, Suharto's great-grandchild. A family friend who traveled to San
Francisco on one of Tutut's jets attests to her generosity: "She gave me a
first-class ticket home to Jakarta. I can still remember the smell of leather
seats and Armani cologne in the bathrooms"
photo: AP
Bambang Trihatmodjo
Age: 45
Estimated
wealth: $3 billion
Major
holdings: 38% of Bimantara Citra, one of Indonesia's largest conglomerates with
27 subsidiaries and interests in everything from oil and gas to hotels,
telecommunications and animal feed
Property:
$8.2 million Singapore apartment, $12 million Los Angeles estate (a visitor
says the latter has two houses, two swimming pools, a tennis court and a
basketball court. "The interior design in the guest house was sort of
nouveau riche, but worse, with tiger-striped fabric on the couches")
Last sighted:
At a bowling alley near Los Angeles
Operating
style: Has been transferring cash overseas and buying shares in foreign markets
for several years. In 1997, say Dutch authorities, he made a "private
visit" to the Netherlands-controlled Caribbean island of
Curaçao--apparently to make a large deposit in the local branch of an
international bank. A friend says Bambang once cared about the needy but
something happened on the way to the bank: "I think he saw all the people
around him getting rich and felt left out"
photo: AP
Hutomo Mandala Putra
"Tommy"
Age: 36
Estimated
wealth: $800 million
Major
holdings: 60% of Humpuss Group, which has more than 60 subsidiaries in
industries ranging from construction to pharmaceuticals
Property:
Ranch in New Zealand, Mill Ride Golf Club, an 18-hole course he partly owns in
Ascot, England. Plays there twice a year and is said to have a respectable 12
handicap
Last sighted:
Jakarta courthouse, where he is the only Suharto child to stand trial for graft
Operating
style: Accomplished stock car racer (once sponsored by Marlboro). Like brother
Sigit, he loves to gamble, thinking nothing of losing $1 million in a single
sitting. One gaming partner says he used to leave Jakarta on his plane with
millions of dollars to wager in European casinos and stop in Singapore on the
way home to deposit what was left. "Tommy loves money," says a former
business partner. "And he always wanted it up front." Like his
father, says a friend of the family, Tommy is "very polite, very
cool"
photo: AP
Sigit
Harjoyudanto
Age: 48
Estimated
wealth: $800 million
Major
holdings: 40% of brother Tommy's Humpuss Group; silent partner in hundreds of
other companies and properties
Property: Two
homes in exclusive Hampstead area of London worth $12 million each, one in Los
Angeles, one outside Geneva
Last sighted:
Suharto family compound in Jakarta neighborhood of Menteng
Operating
style: Serious gambler. Frequented roulette and baccarat tables in London (he
loved the Ritz), Atlantic City, Las Vegas and Perth; gambling partners say he
wagered up to $3 million a night, with career losses of more than $150 million.
After Sigit suffered a bad run in Las Vegas in the late 1980s, his father
banned him from gambling abroad. Jakarta bookies organized a call-in cable TV
show featuring a baccarat table; Sigit, a friend says, lost more than $20
million: "They set up the scam just for Sigit"
Siti Hutami Endang
Adiningsih "Mamiek"
Age: 34
Estimated
wealth: $30 million
Major holdings:
Stakes in several of her siblings' companies plus interests in fruit,
transportation and telecommunications. In 1995 the government appointed her
company Manggala Krida Yudha to undertake a $500 million reclamation project
expanding the North Jakarta seaport. She in turn tried to subcontract the
project to Hyundai Engineering for $100 million, but the deal was canceled by
the government in an effort to purge corruption
Property:
264-hectare fruit park in West Java
Last sighted:
At her home in Jakarta
Operating
style: Low-profile chain-smoker. Entered business too late to make much money.
Is widely known for her Mekarsari Park near Bogor, set up in 1995 to promote
botanical research. A friend says she once approached Mamiek with a business
venture. Mamiek got back to her a week later: "I can't do it. Daddy
already gave that to Tommy"
photo: AFP
Siti Hediati Hariyadi
"Titiek"
Age: 40
Estimated
wealth: $75 million
Major
holdings: Financial services, power, computers, banking, property
Property:
Home on London's Grosvenor Square
Last sighted:
Boston, where her son is attending high school. Her husband, Lieut. General
Prabowo Subianto, is in Jordan looking after his brother's business interests
and visiting an old friend, Jordan's King Abdullah
Operating
style: Chain smoker. Hates dogs. In Jakarta, she slept in one room; her husband
and his Alsatians in another. Likes Harry Winston, Bulgari and Cartier.
"She loves big chunks of jewelry," says a woman who has accompanied
her on excursions to Switzerland and England. Former chairwoman of the
Indonesian Fine Arts Foundation, Titiek has a personal art collection valued at
more than $5 million. Adores movie stars. At a 1994 Suharto party in Bali to
celebrate the opening of Jakarta's Planet Hollywood, she danced the night away
with martial arts star Steven Seagal
photo: AP
"I
Never Asked"
The Attorney
General has few answers
Attorney
General: "It's Very Hard"
WEB EXCLUSIVE
On April 8,
1999, TIME corespondents met in Jakarta with Indonesian Attorney General Andi
Muhammad Ghalib and two of his aides, director generals Anton Sujata and
Soehandjono, to discuss the official investigation into President Suharto's
wealth. The following are expanded excerpts:
TIME: In
investigating Mr. Suharto's social foundations (yayasan), have you found that
some of their funds went to the wrong places?
GHALIB: Yes,
some of the money was not used for social prosperity or social purposes.
TIME: And
that's not enough to charge the former President?
GHALIB:
There's a problem, because to make the charge of corruption, we have to prove
that money came from the state, and is not private.
TIME: The
preliminary report on the foundations by former Attorney General Soedjono found
that many...
SUJATA: Pak
Soedjono never gave information. We found all the information from my team.
TIME: But
what about his audit? You've seen his audit, right?
SUJATA: On
the yayasan, yes. From the aspect of civil and administrative cases: that is
Pak Soedjono. Mr. Ghalib and I have taken the criminal aspect. So the first
time we didn't have any information from Pak Soedjono.
TIME: Except
his audit.
SUJATA: Audit
to him, not to me.
TIME: But in
that audit by Pak Soedjono, there seems to be a basis for charging Suharto with
misusing money meant for natural disasters, building mosques. I'm wondering on
this question of charging other members of the family.
GHALIB: This
is based on the foundations, actually. Mr. Soedjono left this case, but only
about the foundations--only five foundations--and found only about one trillion
or more, but we increased it.
TIME: To 2.4?
GHALIB: Yes,
2.4. As soon as I became the Attorney General, Mr. Soehandjono and I increased
this. We found it because we tried to make it a legal and financial audit--very
serious.
TIME: Do you
think it's likely that other members of the former First Family will be
charged? At the moment Tommy is being investigated.
GHALIB: As
you know, Tutut, Bambang, Sigit--all of them are businessmen. If we have proof
that they're corrupt, of course, according to our law, there must be two--what
do you say--two basic, or two pieces of evidence of corruption. One is that
state money is lost and the second one is that it is against the law. So if you
say there is corruption we have to look for whether it is the state money and
if the state lost money or not. If you find it, it's a corruption case.
TIME: In all
of these months, all that you've investigated is the national car case
[Mobnas], the foundations, and you've made inquiries, what, with embassies,
regarding their assets abroad?
GHALIB: Yes,
yes.
TIME: Why
isn't your investigation any broader than that? There are so many other
allegations.
GHALIB: Yes,
that's a good question. But I have to tell you that because the focus of our
investigation is Mr. Suharto, just Mr. Suharto first. So, if we want to make it
good, we must look for more and more proof on Mr. Suharto himself. We have to
separate him from his family.
TIME: So
you're still in the stage of preliminary investigation?
SUJATA: From
December 1998.
TIME: On the
basis of your investigation so far, and the other information that is available
to you, do you suspect that the former president has broken the law in any
respect?
GHALIB: Ya,
kita curiga. [Yes, we suspect.] Kita, what do you say, suspicion. We have to
increase this preliminary investigation, and if it's proven, we have to
increase it. This is our aim now: to increase it.
TIME: If you
suspect that there has been corruption or embezzlement or fraud, somewhere,
even if you haven't found it, why haven't you asked foreign governments to
freeze assets that the former President may have overseas?
GHALIB: Many
people have asked me about that. It's very hard, you know, because, we start
with the law. So, without any proof, without any evidence, it's too hard to
say. So, I already sent a letter to the Minister of Foreign Affairs to find out
whether there is [money], abroad, in a bank, maybe some land, houses and so on.
The minister has found nothing in the name of Mr. Suharto.
TIME: This is
from Pak Alatas?
GHALIB: Yes.
TIME: And did
he say anything about whether there might be assets in someone else's name?
GHALIB: No,
no, no, except for the family. Family, he said, but I don't know. We are
looking for Mr. Suharto's [money] abroad.
TIME: For
example, Switzerland has said publicly that they're willing to freeze any bank
accounts, they're willing to help but they have to have a request from
Indonesia and still there's no request?
SUJATA:
According to Indonesian law, in the preliminary investigation we cannot freeze
the assets.
TIME: Has the
Ministry of Foreign Affairs approached foreign governments?
GHALIB: About
Mr. Suharto? No. Only about the family.
TIME: People
say, "Ghalib is a military man, a three-star general"
GHALIB:
Suharto is five-star. [Laughs]
TIME: Are you
covering up for him?
GHALIB: No,
no, no. This depends on the law, on what is right. We have investigated him
twice. If we have proof, yes. O.K., we are very, very serious, but this must
proceed through the law.
TIME: What
about the case involving Tommy?
GHALIB: Tommy
was already sent to the court, you know. He is the son of his father. If you
ask a father to choose, himself or his son, better the father. But we sent him
to the court.
TIME: They're
very close.
GHALIB: Yes, very,
very close. So, if we prove that this is our law, he must be there. Now with
Mr. Suharto we are looking for more proof, whether it's there or not. If not
full enough, it's a problem. We have to make it secure that we have already
found this, to increase the status from a preliminary to an investigation.
TIME: We
understand that the former First Family has indicated that it might like to pay
the money on the Mobnas project, the outstanding money. If they do that, won't
that finish off the prosecution case?
GHALIB: In
this case, there are at least two opinions. One is that even already paid but
still can be, but the other said you can't because paid already. But it depends
on the jury. But so far we use that: even if paid already, he still can be charged
because not before, but after this, that's our law now. I told him already ...
even if you've paid, still process.
TIME: So in
the case of Tommy, that won't necessarily mean that the charges are dropped.
GHALIB: It's
still, still going on. It depends on the court.
TIME: Even if
there's no loss to the state.
GHALIB: Yes,
because we are in the process now.
TIME: The
seven yayasan. Last year, I think it was December, it was reported that these
had been given by Suharto to the government or the state. Did he hand the
assets over, or just the operations?
SOEHANDJONO:
The operation is run by the government. The assets belong the foundations. The
money doesn't belong to Suharto. The money always belongs to the foundations.
TIME: Suharto
is the chairman of these foundations. So if the money is still in the
foundations, then it's still controlled by Suharto, right?
GHALIB: No,
no, no, no. It's controlled by the Coordinating Minister for the Eradication of
Poverty. There's a decree on that... It was placed with the Coordinating
Minister Pak Haryono Suyono.
TIME: Why
haven't the assets been handed over with the control of the yayasan?
SOEHANDJONO:
Because their purpose is social activity. So they continue the social
activities, but are run by the government.
TIME: But the
money, the fund, is still under the foundation? And Suharto is still the
chairman of the foundation? But if someone wants to spend foundation money,
they still have to come to Suharto to sign the check?
GHALIB: No,
it's Pak Haryono Suyono. I think Pak Haryono is already running the foundation.
TIME: But we
also heard, actually from someone in your own office, that still, before they
spend the money, they still have to get the signature of the former President.
GHALIB: I
don't know exactly, but according to Mr. Haryono, he's already running it.
Because I asked him whether you already run, yes, everything's O.K. Nobody can
use the money without permission from this minister.
TIME:
Regarding the yayasan, you say that you have found that some of the money has
been misused, but you cannot press charges because it has to be state money. If
you know that the yayasan's money is coming from profits of state banks, or
from the salaries of civil servants, that's state money being misused. How much
evidence do you need before you will charge Suharto?
GHALIB: We
only need two, at least two. Number one is that we already prove the money is
state money, lost there and come to somebody there, whether it is personal, for
his family or for someone else. That's number one. The second one is whether
it's against the law.
TIME: So, is
it not against the law to take money from civil servants, state companies,
state banks, and lend it to friends and their children for their businesses?
GHALIB: No,
no, no. Because, if we can prove that money is direct from the state, the state
loses the money, and it is against the law. I can give you one example. Here in
Indonesia, the scholarship uses the state's money for going abroad. But when
you come back from abroad and the money isn't used according to plan, this can
be corruption. The money is lost already, but it's not against the law. So we
can't say.
TIME: So you
have to have both elements?
GHALIB: Must
be both.
TIME: Are you
getting close to laying formal charges against Suharto?
GHALIB:
According to the TAP MPR [special parliamentary decree] we have to. Before the
Sidang Umum [special house session], it must be finished, that's my target.
TIME: Which
is December?
GHALIB: No,
no, October, November.
TIME: Both
Suharto and the children?
GHALIB: Just
Suharto.
TIME: Are you
also investigating the other children?
GHALIB: If we
find the proof.
TIME: Are you
looking for proof?
GHALIB: We
are looking, and we are going to find out whether there is data or not. If you
have data, for instance if you have Mr. Suharto's account in the United States
or wherever, give me the number. Tomorrow I'll catch a flight there, because I
already have the letter from Mr. Suharto. I'm very happy to get the account
number.
TIME: But
what if it's under someone else's name? Are you looking for that? Are you
looking for assets held under another name?
GHALIB:
Another name? Yes, of course, I would go there. He told us if you get the
name--or the other name--as soon as you can prove it, come. We have already
investigated from here. So, it depends on the proof.
TIME: Why
aren't you investigating allegations of corruption in relation to the National
Logistics Agency or the state oil company Pertamina?
GHALIB: Maybe
the reason is, if we want to investigate all of them, because he was the
President, so, of course, many of them are connected, including us.
TIME: What
are some of the difficulties that you have encountered?
GHALIB: For
instance, to find proof from the yayasan through these two legal and financial
audits--it's not easy to find that. Where's the money transferred? We use time,
maybe three to four months for the financial audit. For the Mobnas, it's also
the same. We have to find out--the minister, we asked the ex-minister of
finance, and so on--we have to ask him ... It's not easy. From there we have to
find out again, we see the book [he uses his hands to show the enormous amount
of documents], so we need a lot of time to find out, but not more than the
Sidang Umum. We have to finish before then.
TIME: Then
even if you haven't investigated Bulog, Pertamina, then you won't do it at all?
GHALIB: Yes,
of course if we need them, we can find out. But so far, with these two cases I
think we can do something if we want to increase to the others--Bulog and so
on, and so on.
TIME: But
what about the people who say that you are giving the former President a lot of
time to move the money into the name of his lawyers or other proxies?
GHALIB: No,
no, we haven't given a lot of time for it, so far it has been according to the
law. We can't go against the law. Law enforcement against law--we can't do like
that. It must be according to the law.
TIME: If it's
true that there are billions of dollars in Austria, don't you think you're
giving them a lot of time to move it to another country?
GHALIB: We
have to find out. We can prove, you know. We can see that there is the moving
of money, we can find out. We can, no problem.
TIME: You're
not worried.
GHALIB: No,
because of the bank. Here, for instance, we can find out about a corrupter, you
know, he sent money everywhere. The proof starts here. We call it a financial
audit. We can find it. So, we need time, you know. Not easy to get it because
most of them are very, very clever to make loss to the state.
TIME: But
don't you think it would make it easier if you froze the assets first, so you
don't have a moving target?
GHALIB: No.
My target is not more than the Sidang Umum. I have to finish it all. We are
limited by the law because before someone is [proven] a corrupter, for
instance, we can't accept his account in the bank. But if he's already been
increased to the status of tersangka, accused, we can find it, we can stop it.
That's our law here.
TIME: Then
you can freeze?
GHALIB: Yes,
then we can freeze that.
TIME: Which
law says that you can't request the foreign government to ...
GHALIB:
That's our Indonesian law. Decree No. 3, 1971.
TIME: That's
here. But they can do it overseas. The Swiss are waiting to do it.
SOEHANDJONO:
But the case is in Indonesian court, not in a foreign country's court. [Laughs]
So it should be based on the procedures here.
GHALIB: I met
already with the ambassador of Switzerland, because he came here. I asked him,
"Sir, can you assist us with Mr. Suharto's account abroad?" And he
said, "Yes, we can help you if Mr. Suharto is already in the status of
tersangka [accused]. So, as soon as he is accused, they can open his account.
TIME: But at
this stage you can't tell us whether you're planning to charge Suharto to make
him a tersangka or not?
GHALIB: Of
course, I told you already, it depends on the proof. We have plans to send to
the court all the corruption findings. But it's based on the proof. That's our
problem. For instance, Mr. Tommy Suharto: he's already been proven. We agree
completely that we have proof to send him, so we send him. It's easier because
we have found this. It's very easy to get the proof. But this case, it's not
very easy--that's our problem.
TIME: On the
financial auditing you mentioned before, the seven yayasan, you say they've
got--your audit of Suharto's seven main social foundations disclosed that they
have about 5.4 trillion rupiah. So, our question is, if we look at their
sources of revenue since they began in 1978, like Dakab, Supersemar, Dharmais,
it's 2.5% of the profits of state banks. In the case of Dharmais, it's a
percentage of the salaries of civil servants. These foundations--three of
them--had a share in Nusamba. Nusamba had a share in Freeport. How is it
possible that over 20 years there's only five and a half trillion? Isn't the
real figure much higher than that?
GHALIB: Your
estimate is the same as mine. There may be more, but how could we find it? We
are not experts. Maybe you have experts. Can you give me experts?
TIME: So, 5.4
trillion is your current estimate of what they have. What is your estimate of
how much revenue they received over the past 21 years?
GHALIB: Ha,
ha, ha ... that's very good, that's very good. Actually, I can understand your
thinking, very good, actually. You must be an Attorney General, a very good
one. Thank you very much, that's very good.
TIME:
Soedjono had an estimate for how much they have received. You must have seen
Sudjono's report.
GHALIB: He
told you? Soedjono told you?
TIME: So
after investigating the foundations for three months, you don't have an
estimate of how much revenue they received over the past 21 years?
GHALIB: You
know why? We tried to find out where this money comes from. Because it comes
from the cuts of salary, from the banks, and so on. You can see every month.
So, we can see, according to the books, where the money is come from. It's
based on that, not on my calculations.
TIME: Well,
according to the books, how much revenue have they received over the past 21
years?
GHALIB: I
told you, 5.4 trillion rupiah.
TIME: That's
the total? Do you believe that?
GHALIB:
That's the financial audit. This depends on the final audit. Believe it or not,
we can estimate because it's according to the financial audit.
SOEHANDJONO:
And we didn't conduct the financial audit. It was done by others, the auditors.
So, they made up the amount of the money, not us. We just received the amount
from them, based on the investigation done by them.
TIME: But can
I just ask you, do you believe that those books that have been audited for you,
by BPKP, do you believe that the books are accurate?
SOEHANDJONO:
We tried to find very old books. If you worked in that area for several months,
you would have gotten a headache and your eyes would not be in a good condition
because the books are very, very old, from '74, '75, '76, up to '98.
TIME: Have
you obtained the former President's tax records?
GHALIB: Yes.
TIME: And the
children, have you also gotten their tax records?
GHALIB: For
the children, not yet, not yet.
TIME: Have
you got the bank records for the children?
GHALIB:
Banking records, no. For Mr. Suharto, yes.
SOEHANDJONO:
We have asked about 90 banks in Indonesia and from some of the banks, we can
find some of Mr. Suharto's money. But that has already been announced by the
Attorney General.
TIME: When
Mr. Suharto says he has $3 million and however many hectares, is that all
accurate according to your investigation?
GHALIB: We
examined 72 banks, and we found 23 million is Mr. Suharto's money, his private
money.
TIME: That's
the total? 23 million?
SOEHANDJONO:
Billion.
GHALIB:
Billion, yes.
SOEHANDJONO:
It's almost 24, in about five banks. That's all the money that he has in the
country.
TIME: What
was Suharto's presidential salary?
GHALIB: I
don't know exactly because I never asked.
SUJATA: I
asked President Suharto where his money come from when he went abroad? He got
pocket money, he brought and sent to the bank for more than 30 years.
SOEHANDJONO:
He never used the money. It was always prepared for when he went somewhere--for
food and lodging.
TIME: Do you
accept that explanation, that he's got almost 24 billion rupiah? Where did it
come from?
SOEHANDJONO:
From pension.
TIME: How
much is the pension?
SOEHANDJONO:
I don't know. And also from the--he has one or two houses that he has
contracted to other people, so it also comes from that.
TIME: You've
been investigating Suharto since December on suspicion of corruption, but you
don't know what his monthly salary was? Is this a serious investigation?
GHALIB: Very
serious, you know, very serious, but this is just preliminary.
Investigator
A man on a
mission to track the loot
Man
with a Mission: Find Suharto's Loot
By DAVID
LIEBHOLD Newcastle
When Suharto
presented an environmental award to George Junus Aditjondro in June 1987, the
President added some perfunctory words of advice: "Continue with your
work." Suharto might now regret that cursory counsel. Turning his
attention from green issues to corruption, Aditjondro has made himself the
world's leading authority on Suharto family wealth. After years of analyzing
Indonesian press reports, he estimates the fortune to be at least $25 billion
(larger than the amount TIME ascertained through its reporting). Nowadays any
research on the subject begins with Aditjondro, whose articles and interviews
are reproduced on hundreds of Internet sites. "He was the first guy to put
together detailed information on the Suharto wealth and businesses," says
Endy Bayuni, managing editor of the Jakarta Post. "He felt that somebody
had to do it."
Aditjondro's
interest in Suharto Inc. grew out of his work with conservation groups: he kept
stumbling upon First Family companies. He says he discovered that behind almost
every case of wanton environmental damage--from industrial pollution to
destructive practices in mining, logging or tourism--lurked a Suharto firm.
Rather than fight against myriad individual abuses, Aditjondro decided to
attack the root of the problem. In 1994 he began collecting and cross-checking
press clippings on the family businesses, painstakingly unraveling a
complicated web of corporate interests. Though he fled to Australia in 1995
under police pressure, Aditjondro, 53, continues to investigate every Suharto-linked
asset he can find. He insists it's not personal. "My fight is against the
system, the oligarchy," he says. "It's larger than Suharto and more
difficult to transform than simply removing him."
The son of a
Javanese judge and a Dutch nurse, Aditjondro went to school in both Indonesia
and the Netherlands. For most of the 1970s, he worked as a reporter for the
newsweekly Tempo (banned by Suharto in 1994 and reopened last October). In the
1980s he got involved with non-governmental organizations, championing the
rights of indigenous people--particularly in Irian Jaya, East Timor and
Aceh--and working to build a network of conservationist groups across the
archipelago.
Only months
after he began researching the Suharto business empire, police started summoning
Aditjondro for interrogations. With a lengthy jail term looming, he left
Indonesia, giving up his teaching position at Satya Wacana University in
Central Java and the home that he and his wife Esti had just finished
renovating. He took a research fellowship at Perth's Murdoch University and
later a five-year teaching contract at the University of Newcastle, on
Australia's east coast, where he has developed a course on the sociology of
corruption. Last year Aditjondro published From Suharto to Habibie: The Two
Leading Corruptors of the New Order, which has sold 21,000 copies. He is now
working on a book comparing the Suharto and Marcos oligarchies.
Both of
Aditjondro's favorite topics--the Suharto wealth and the rights of ethnic
minorities, issues that were taboo only a year ago--are now at the center of
public debate in Indonesia. But he is saddened by the way his academic
colleagues played it safe for so long, embracing reformasi only after
Indonesian students pushed it into the mainstream. Aditjondro's identification
with the underdog may be related to his ethnically mixed origins. "The
Dutch kids called me 'nigger' and the Indonesian kids called me 'whitey,'"
he says. "If you're a marginal person, either you become crushed by the
majority, because you try to assimilate, or you use your marginality to
understand all sides--the oppressed, the oppressor and the system itself."
Money
Trail
A top sleuth
lays out a battle plan
Secrets
of a Professional Money-Tracker
By STEPHEN
VICKERS
If Indonesia
is really serious about going after the Suharto family's wealth, here's how to
proceed. The first mistake investigators make in a case like this is to pore
over accounts and ledgers at the expense of reality. The cardinal rule is never
to believe in the integrity of any document until it has been independently
verified. This is especially true when dealing with powerful, long-serving
leaders who have had entire governments at their disposal to cover their
tracks.
The first
phase is to develop a strategy. We work with a small government team to
establish the priorities and scope. Security has to be very tight. The quarry
never stops moving assets or changing companies, domiciles and banks. In the
second phase, investigators begin collecting and analyzing available
information. A team of investigators and forensic accountants pores over tax
and bank records and identifies corporations, trusts and nominee companies that
can be pried apart. The goal is to find real, recoverable assets and to develop
leverage over individuals and institutions involved in concealing them. The
early seizure of cash and property can provide start-up or working capital to
continue the hunt.
The third
phase is to identify individuals--everyone from drivers to lawyers to business
partners--who have been intimately involved with the target, his family and his
cronies. Searching phone bills, faxes and computer records--nothing is ever
really erased--can determine a core list of those people who might want to
talk. Officials of other nations should be approached to help on a
government-to-government basis to break local bank-secrecy provisions. In the
case of Kroll's search for the wealth of Saddam Hussein, the big break came
when we knocked on the door of his lawyer in Switzerland. That led to France,
where Saddam held billions of dollars in shares in a media firm.
The last
phase is to begin a series of liquidations, civil actions and leveraged discussions
to pry open the secrets. There is a simple axiom: follow the money, and
everything will come. Where crimes have been committed by accountants or
lawyers acting on behalf of the target, then formal reports will be packaged
and delivered to the proper authorities. Such packages will also be served on
associations of accountants and lawyers. This makes other corrupt professionals
more likely to cooperate.
In a case
like that of the Suharto family, the search could last from one to two years.
We'd recommend a team of five investigators, five case managers, 15 to 20
accountants, five lawyers and a global field team of 100 others to call on as
needed. We would use intelligence analysts' software, an encryption cracking
kit, a computer memory recovery kit and a forensic laboratory. However, the key
asset will be the Indonesian people, at home and abroad. If they seek it, it
can be found.
Stephen
Vickers is executive managing director in Asia for Kroll Associates, which has
traced the assets of Haiti's Jean-Claude Duvalier, the Philippines' Ferdinand
Marcos and other autocrats
Rich Despots:
Where Does Suharto Rank In History?
KLEPTOCRAT
Philippines'
dictator Ferdinand Marcos, ousted in 1986, stole up to $10 billion
EMPEROR
Ethiopia's
Haile Selassie, ousted in 1974, had stockpiled $2 billion
FAMILY MAN
Though the
fortune has dwindled, Suharto & Co. still sit on $15 billion
INSATIABLE
Zaire's
Mobutu Sese Seko piggy-banked $5 billion before his overthrow in 1997
BABY DOC
When he fell
from power in 1986, Haiti's Jean-Claude Duvalier made off with $500 million
Viewpoint
Jeffrey
Winters on stealing big
It
Pays to Think Big
History
favors dictators who take billions, not millions
By JEFFREY
WINTERS
President
Suharto opened his 1989 autobiography with memories of his simple childhood
bathing in muddy canals in Java. "My roots are in the village," he
wrote. From the start of his dictatorship in 1966, Suharto carefully cultivated
an image not just of humble origins but of lifelong simplicity. He claimed to
be a common farm boy with common values, who rose without ambition to a
position of dominance over one of the largest countries in the world, and who
ruled in the best interests of the nation.
Eager
supporters at home and abroad swallowed that line whole. One American
ambassador to Indonesia in the 1960s described Suharto as a man of
"sincerity and humble courage." What better man to lead Indonesia out
of the Third World? President Richard Nixon told Suharto upon landing in
Jakarta in July 1969, "The People of the United States wish to share with
you in this adventure in progress." In 1986, at the height of Suharto's
military-backed rule, President Ronald Reagan spoke in Indonesia of the
"winds of freedom" blowing through the region. Throughout his more
than three decades of rapacious dictatorship, Suharto's public image served the
important political function of deflecting criticism and seeding disbelief that
he could be capable of all that his critics would later claim.
In the early
years of Suharto's New Order government, his greedy wife Madam Tien took most
of the heat. Then it was Ibnu Sutowo, head of the state oil company Pertamina,
who nearly bankrupted Indonesia in the mid-1970s by borrowing billions of
dollars that were used in part by Suharto for political and personal ends. When
Suharto's children came of age in the 1980s and his grandchildren in the 1990s,
they became the focus of resentment. All along, the dictator himself managed to
maintain his Teflon coating. Even as evidence now mounts of Suharto's
staggering personal wealth, he can still step up to a microphone and declare
flatly, as he did last September, that he doesn't have a single cent in
holdings abroad.
When leaders
commit crimes, one lesson from history is that it helps to transgress on such a
massive scale that few will believe the deed possible. The theft of mere hundreds
of millions of dollars is entirely believable--that's what landed the powerful
Salinas family of Mexico in deep trouble. A much better strategy is to steal
billions, preferably tens of billions, just to be on the safe side. The sheer
size and incomprehensibility of the corruption buys a degree of security from
prosecution. For a leader like Suharto, the formula works even better if
disbelief of scale blends seamlessly with a personal image of impeccable
simplicity.
But the
reason it has been so difficult even to mount an official investigation of
Suharto goes much deeper than psychology. From the start, Suharto's New Order
benefited from an international banking system that favors kleptocrats by
offering no strong rules or norms that can act as a counterpoint to bank
secrecy. The banks themselves, along with the money handlers who labor to make
ill-gotten wealth so hard to track and recover, profit handsomely for their
services and from the deposits they take in. When the fortunes of dictators get
stored abroad in secret accounts for decades with the complicity of foreign
banks and friendly governments, international actors grow deeply reluctant to
have that history of collusion or indifference exposed. At a minimum, it makes
finger wagging at declining dictators and their corrupt governments much harder
because the clear line separating "them" from "us" breaks
down.
The task of
charging dictators with crimes, the crucial first step in going after their
assets, is much easier if the ruler gets pushed not only out of office but also
out of the country. Unlike the Shah of Iran, Duvalier in Haiti, Somoza of
Nicaragua, Mobutu of Congo and Marcos in the Philippines, Suharto of Indonesia
remains in a country where his influence is still formidable. This leads to
truly absurd political maneuvering by officials to protect their fallen leader.
Attorney General Andi Muhammad Ghalib, for instance, faces an almost daily
barrage of foreign and domestic press reports of Suharto family wealth, all of
which he has refused to investigate aggressively. Instead he talks about how
unreliable press reports can be and suggests repeatedly that it is the
accusers' responsibility to come forward with the whole corruption case solved
and ready for court action. This would be high comedy if the political and
economic stakes for Indonesians were not so high.
If the Marcos
case is any guide, Indonesians should brace themselves for some big
disappointments. The Filipinos were quick off the blocks: they exiled Marcos
immediately and froze assets around the globe. Yet after nearly 14 years and
many millions in legal and forensic accounting fees, they have recovered only a
small portion of Marcos' fortune. The Indonesians started slowly, have neither
charged the Suhartos with anything nor attempted to locate or freeze foreign
assets. Instead, the Habibie government stalled long enough to allow the
Suhartos to hide and protect the assets abroad--so even if action is finally
taken, Indonesians will get back almost nothing.
Jeffrey
Winters, professor of political economy at Northwestern University in the U.S.,
is the author of Power in Motion: Capital Mobility and the Indonesian State
"Not
One Cent Abroad"
Suharto's
lawyers respond
The
Lawyer: "Not One Cent Abroad"
Holed up in
the family compound in Jakarta, Suharto declined repeated requests for an
interview about his holdings. But Hong Kong bureau chief John Colmey met
separately with two of the former President's lawyers, Otto Cornelis Kaligis,
head of Suharto's eight-member legal team, and Juan Felix Tampubolon. Excerpts
from the interviews:
TIME: There
is evidence that $9 billion was transferred from Switzerland to Austria under
President Suharto's name.
Kaligis: When
I asked President Suharto about this, he told me: "I don't have one cent
abroad." And he gave absolute power of attorney to the Attorney General to
investigate. If he finds any evidence, Mr. Suharto is ready to be brought to
court. Therefore, I do not believe it is true.
TIME: Has
Suharto accumulated billions of dollars in hidden wealth?
Tampubolon:
There is no legally admissible evidence to say he has accumulated billions. The
AG's office has identified his bank accounts: the amount is $2.4 million. Seven
foundations chaired by him received funds amounting to $547 million. These
foundations, as well as their assets, have been transferred to the government.
TIME: It is
seems unlikely those foundations could collect only $547 million over 19 years,
given their revenues. In 1990, for example, they had a controlling share in
Bank Duta, with assets of $1 billion.
Kaligis: I
don't have every detail about them, but the money of the foundations was used
to build mosques and churches, to fund student scholarships, and for social
activities.
TIME: The
AG's office says more than half the money was lent to Suharto's children and
friends, who rarely repaid any of it.
Kaligis: In
my experience accompanying the President to the examination by the AG, all the
evidence was delivered to him. So far his investigations of Mr. Suharto have
never touched the children.
TIME: Should
Suharto be held responsible for any crimes of the children?
Kaligis: The
law says no.
TIME: Do you
think Suharto was aware of the greed of his children?
Kaligis: He
concentrated on the government. The children as citizens have the right to
carry on business, and it has nothing to do with policies of President Suharto.
TIME: Will
Suharto ever stand trial?
Tampubolon:
In my opinion he will never have to. For every crime he committed, if any,
before 1981, the right to prosecute has expired under the statutory period
limitation. For any crime committed within 1981-1998, if any, the right to
prosecute has been abolished by the decrees of the People's Consultative
Assembly, which accepted Mr. Suharto's reports on how he carried out the
assembly's mandate.
TIME: Isn't
it ironic that many Suharto critics were once his biggest supporters?
Tampubolon:
Of course it is ironic that many who used to support Mr. Suharto now consider
him as the only culprit of every error committed in the past. Doesn't that mean
that they're criticizing themselves?
TIME: Does
Suharto continue to influence the military?
Kaligis: When
I asked if he is still involved with political life, he said there are "no
activities at all." What he is doing now is praying and facing his old
age. He knows he is going to die, and as a Muslim he prepares himself for that.
Flawed
Legacy
Author
Pramoedya Ananta Toer says that Suharto's sins run much deeper than greed
Dictator
from Day One
Suharto
abused his power from the start, says Indonesia's foremost writer
By PRAMOEDYA
ANANTA TOER
As the Dutch
writer Multatuli has stressed, it is the obligation of every human being to
become human. Whoever murders his own kind, therefore, violates the basic
principle of his existence. And murder, where there is no legal basis, is a
crime against humanity. Simple logic, but it isn't simple in practice. The
events in Indonesia of 1965-66 were a test of this basic definition of
humanity. Compared with the mass slaughter of those years, all the lies,
corruption and nepotism of Suharto's regime are a small, trivial matter.
In early
1966, General Suharto assumed control of the military and the country, months
after a faction of the army kidnapped and killed six generals on Sept. 30 the
previous year. Indonesian history books and newspapers still refer to this
incident as an "attempted communist coup," but there is no evidence
that the Communist Party of Indonesia, as an organization, was involved in the
kidnapping. The communists had 3 million members and supporters at that time.
If they wanted to launch a coup, why didn't they just mobilize their branches
in cities and towns outside Jakarta? Why was the party leadership caught
completely off guard by the kidnapping? The coup was Suharto's.
For the next
13 days I watched the army hunt, murder and loot until, finally, I myself
became one of the victims. People known or suspected to be communists or
sympathizers were slaughtered wherever they were found--on the steps of their
houses, on the side of the road, while squatting in the lavatory. The
Indonesian élites had lost the ability to resolve their differences peacefully,
in the political sphere, and the last word belonged to the group that possessed
firearms: the army.
During the
first days of October, Armed Forces chief General Nasution made commando-like
speeches on the radio, urging the public to "destroy the Communist Party
root and branch." After these pronouncements, the murder, looting and
burning of the army intensified to the point of insanity. It was Nasution who
baptized the military regime with the name "New Order," which is used
to this day.
On Oct. 13,
1965, it was my turn to be targeted by a pack of armed, masked men. There were
no official, written charges. And what happened to me was also experienced by
1.5 million others. Half a million people were killed, according to the Western
press, and some military officials say the number is even higher. Suharto
needed the slaughter to instill fear in everyone. He tried to legitimize his
rule by claiming Sukarno had conferred power on him in a letter dated March 11,
1966--a letter that has never been produced to the public and which is now said
to have been "lost."
Suharto's
next step, in 1971, was to stage a general election in accordance with his
taste and needs. Two years later he required all political currents to merge
into just three parties, yielding a "constitutional state" complete
with the recognition and support of Western countries.
With the
founding of the New Order, the trampling on humanity continued. The killing has
never stopped, right up to Suharto's fall and beyond. A prison official once
told us: "The only right you still possess is the right to breathe."
That was an exaggeration. In reality, many political prisoners were killed,
without judicial process, either directly or through inadequate food rations.
Outside the concentration camps and the jails, the families of political
prisoners were persecuted, humiliated and intimidated by the New Order
bureaucracy.
The
intellectuals ran for cover beneath Suharto's feet. No one, apart from a few
exiles, dared to challenge the New Order, which created new lies to bolster the
old ones, so that the untruths were doubled. Every state institution faithfully
carried out its main task: to vindicate and support Suharto. Not once did the parliament
so much as discuss the fate of the millions who were killed or deprived of
their rights.
When I was
arrested in October 1965, my study was ransacked and all of my papers
destroyed, including unpublished manuscripts. Again, when I left Buru Island
concentration camp in 1979, all my papers were taken from me. (Among them was a
letter from Suharto, in which he advised me to pray to God for guidance in
"returning" to the path of righteousness.) The judiciary never made a
sound about the violations of my rights. Everyone agreed with Suharto, every
institution was a tool in his hands.
Suharto,
whose rule was blighted by the deaths of hundreds of thousands--perhaps
millions--is a criminal against humanity. Everyone on the face of the earth has
the right to bring him to court for his crimes because, as Sukarno was fond of
saying, "humanity is one."
I extend my
highest respect and appreciation to the students and other people who succeeded
in toppling the dictator last spring. They did so without resort to kidnapping,
killing, physical abuse, slander or intimidation. It is only their consistent
action, to reform the life of the state and the nation, that can rid us of the
New Order's criminal brutality and bring Indonesia to a new life.
Pramoedya
Ananta Toer, Indonesia's best-known author, released The Mute's Soliloquy: A
Memoir this year
END PAGES
MAY 24, 1999
VOL. 153 NO. 20
To
Our Readers
By DON
MORRISON Editor, TIME Asia
For much of
the past four months, a team of TIME journalists has been poring over
documents, crunching numbers and doggedly pursuing bankers, diplomats,
academics and former and current Indonesian officials. The goal of it all: to
trace the wealth Suharto and his family amassed during the former President's
32 years in power--the subject of this week's special report. For years,
Indonesians have been reluctant to discuss the reach of Suharto Inc., so firm
was the President's grip on the country. His overthrow a year ago this week has
inspired calls for an official accounting. Yet several of TIME's sources still
expressed concern about their safety. "I don't want to die. I have a
family. Have pity on me!" said a consultant, pleading with correspondent
David Liebhold not to use his name (we obliged). "I waited for him to
smile," says Liebhold, "but he didn't."
Such concerns
prompted TIME's team, led by Hong Kong bureau chief John Colmey, to take
precautions. A radio in the Jakarta hotel suite that often served as the team's
headquarters was turned up louder whenever sensitive matters were discussed.
Notes were locked away in the hotel safe overnight. Important sources were
referred to by code name. Thus, a well-connected businesswoman became
"Mother Teresa." And a breakthrough came when "the Dalai
Lama," code for an official in the Attorney General's office, finally
decided to cooperate. "But if you use my name, I'll kill you," he
warned. Recalls Liebhold: "I waited for him to smile, but he didn't."
Nor was the
going much easier outside Indonesia. Instead of fearful witnesses, our sleuths
encountered layers of nominee companies, bank-secrecy laws and reluctant
sources. "For me, the assignment meant a long series of confrontations
with stony-faced guards at luxury compounds and short interviews with testy
property managers," says reporter Laird Harrison in Los Angeles.
Nonetheless, he managed to locate two dozen swank Los Angeles addresses tied to
Suharto. With similar persistence, London's Kate Noble found that Suharto son
Tommy partly owns an 18-hole golf course at Ascot.
The
investigation convinced our journalists that it may take years to erase the
legacy of corruption and fear that marked the Suharto era. But they found Indonesians
to be growing bolder by the day. After weeks of fruitless search for a closely
guarded statistic, Suharto's official salary, reporters Jason Tedjasukmana and
Zamira Loebis finally found an official who supplied it gladly: $1,764 a month.
Explained the bureaucrat: "It's reformasi time."
