Putting the Semen Padang case to rest<\/p>\n
Saldi Isra, Padang<\/p>\n
A new page was turned in the history of Indonesia's antigraft
\ncampaign when the district court in Padang, after a few weeks of
\nlegal process, ruled in May that 43 councillors of West Sumatra's
\nlegislative assembly were guilty of corruption.<\/p>\n
Most people in the province attributed the great achievements
\nof the anti-graft drive to the hard work and perseverance of
\nlocal civil-society organizations and the good cooperation of
\nlocal law-enforcing agencies.<\/p>\n
Yet more important is that the success has triggered similar
\nanti-corruption drives in many other provinces, resulting in the
\nprosecution of hundreds of district or provincial legislators.<\/p>\n
However, the great success is not able yet to improve foreign
\ninvestors' negative perception of the people and local
\nadministration in West Sumatra in specific relations to the
\nimbroglio encountered by PT Semen Padang company since 2001.<\/p>\n
It is still fresh in our memory that on Nov. 1, 2001, the West
\nSumatra legislature issued a political decision endorsing the
\nstatement of a group, which claimed to represent the local
\npeople, which in effect put PT Semen Padang under their control
\nuntil this cement unit spun off from its holding company, PT
\nSemen Gresik, and was restored to its pre-1995 legal status as a
\nfully state-owned company.<\/p>\n
Semen Gresik, a publicly-listed company, which is 51 percent
\nowned by the government, almost 25.5 percent by Mexico's Cemex
\nand 23.5 percent by the investing public, is Indonesia's largest
\ncement group.<\/p>\n
In terms of constitutional law, the decision of the assembly
\nis basically flawed, reflecting inconsistencies and a breach of
\nlaw on the part of the legislature. Moreover, in the context of
\ncorporate law, there is no such term as a \"temporary takeover\".<\/p>\n
Therefore, the statement on the \"temporary takeover\" only led
\nto legal confusion, in that problems related to criminal law were
\nmixed with those related to civil law -- and that the authority
\nof the administration was jumbled with that of legitimate
\nshareholders of a legal business entity.<\/p>\n
In retrospect, it is known that, at the community level, many
\npeople in West Sumatra even questioned the legitimacy of
\nthe\"political declaration\" which was purportedly made on behalf
\nof the people.<\/p>\n
People who live around the Semen Padang site, for example, do
\nnot even care about the spin-off issue. What mostly matters to
\nthem is how their communal land, from which the raw materials for
\ncement production have been extracted, will give them the biggest
\neconomic benefits and how Semen Padang's community programs will
\nhelp local economy.<\/p>\n
Sponsors of the spin-off campaign desperately tried to link
\nthe \"temporary takeover\" with an attempt to restore the dignity
\nand pride of the West Sumatra people. They even labeled those
\nopposing the takeover as traitors.<\/p>\n
In fact, it must honestly be admitted that after Semen Padang
\ndeveloped into a financially strong company, this cement unit had
\nbeen exploited by local political leaders as their cash cow.<\/p>\n
This course was not unusual, especially under Soeharto's New
\nOrder administration, where almost all state companies had been
\ntreated as cash cows by senior officials and political leaders in
\ncollusion with their business cronies.<\/p>\n
Immediately after the launching of regional autonomy in 2001,
\nmembers of the legislature joined the rent-seeking fray and
\neasily colluded with government officials to milch Semen Padang.<\/p>\n
Several vested interest groups had mounted opposition to the
\ncentral government's decision to divest its controlling stake in
\nSemen Gresik to Mexico's Cemex, the world's third largest cement
\ngroup, in 2001, afraid that they would no longer be able to use
\nSemen Padang as their cash cow.<\/p>\n
They subsequently escalated their opposition to demanding
\nthat Semen Padang be restored as a wholly state-owned company
\nthrough a spin off from Semen Gresik.<\/p>\n
When the spin-off campaign needed local political support,
\nsome councillors of West Sumatra legislative assembly found this
\nas a good opportunity to gain access to Semen Padang's business.<\/p>\n
Just witness how local and national newspapers reported
\nbetween 2001 and 2003 so many questionable and allegedly
\ncollusive business deals between Semen Padang and a number of
\nlocal officials and regional councillors.<\/p>\n
These collusive business deals had been made possible by Semen
\nPadang's previous management, which had fully supported and used
\nthe company's funds to finance the campaign in the province and
\nlobbying in Jakarta.<\/p>\n
In view of the development of circumstances around Semen
\nPadang, many people believe that the drive to make Semen Padang
\nan independent state-owned enterprise is nothing but a tactical
\nstep to preserve the company as a \"milch cow\".<\/p>\n
Given these circumstances and developments, we cannot consider
\nthe campaign for the spin-off a genuine aspiration of the
\nmajority of West Sumatra people.<\/p>\n
One indication could be seen in what the sponsors of the
\nspin-off claimed to be the \"grand rally for the spin-off
\nstruggle\" on May 22, 2004, which actually was attended only by
\nfew hundreds of people. This clearly showed that the spin-off
\nissue did not enjoy broad support from the local community.<\/p>\n
I believe the majority of West Sumatra people are quite
\nrational when viewing the development of this spin-off issue.
\nThey also should have taken note of the financial mismanagement
\nin Semen Padang until the old management was finally ousted last
\nSeptember.<\/p>\n
An internal audit of Semen Padang, for example, found that in
\nthe 2002-2003 period the company incurred losses of Rp 115
\nbillion or US$13 million (Kompas, 24\/02, 2004).<\/p>\n
Field observations have shown that many people hope the Semen
\nPadang case can be settled once and for all, but, unfortunately,
\nthe Megawati government remains hesitant about making a firm
\ndecision.<\/p>\n
Consequently, a lot of damage has been done to Semen Padang
\nand to its holding company, Semen Gresik, which had several times
\nbeen suspended from trading on the Jakarta Stock Exchange because
\nits independent auditor classified its consolidated financial
\nreports for 2002 and 2003 with a disclaimer.<\/p>\n
Protracted legal problems with Semen Padang also had prompted
\nCemex last December to file a law suit against the Indonesian
\ngovernment at the International Center for Settlement of
\nInvestment Dispute, an affiliate of the World Bank, in
\nWashington.<\/p>\n
Now is the right time to take a concrete step toward the
\nsettlement of the Semen Padang case. Legal action must be
\nimmediately taken before the spin-off issue becomes part of the
\npolitical agenda of the new councillors of the West Sumatra
\nlegislative assembly for the 2004-2009 period.<\/p>\n
The writer is a lecturer at the School of Law at Andalas
\nUniversity and coordinator of the Forum Peduli Sumatera Barat
\n(FPSB, Forum for Concern for West Sumatra), which was largely
\nresponsible for the anticorruption campaign against legislators
\nin the province. Saldi can be reached at sisralat@yahoo.com<\/p>",
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