Up in the air<\/p>\n
I thank Mr. Richard B. Ness of PT. Newmont Minahasa Raya for
\nhis courtesy in responding to my article so thoughtfully and
\nopenly (The Jakarta Post, April 28, 2000). Mr. Ness says
\ncorrectly that my article was based on news reports of the
\nsettlement terms and not on the settlement document itself.<\/p>\n
If I understand Mr. Ness correctly, the settlement actually
\ninvolved a payment of US$500,000 for unpaid taxes and penalties,
\nnot $2.5 million. Insofar as my conclusions grew out of a
\nmistaken belief that the company paid an excessive sum to settle
\nthe case and agreed to establish a new community development
\nfund, then to that degree what I implied -- that this settlement
\nwas suspect and therefore casts doubt on Newmont's motives
\n-- was also mistaken. I apologize for any unwarranted or wrong
\npresumption of guilt I might have conveyed about Newmont.<\/p>\n
Mr. Ness explained that the $500,000 that the company paid
\nrepresented previously unpaid Mineral C tax on materials used for
\ncommunity development programs. The company feels satisfied that
\nbecause the regent dropped his claim to Mineral C tax on this
\noverburden material, there has been an implicit acknowledgement
\nthat contracts of work will be immune from local interference.<\/p>\n
But the dropping of a claim does not normally have the legal
\neffect of settling the underlying question of whether a claim was
\nlawful or not in the first place; it only protects one party from
\nthe other party in a specific situation. (If this settlement did
\nhave that effect of settling a question of law, it might be
\nuseful for the government to disseminate a fuller explanation in
\nthe National Gazette). Without knowing what the company's
\ncontract of work says, what the Mineral C tax law says and how
\nthe law defines \"overburden\", it remains unclear whether the
\nregent had any reasonable basis for trying in the first place to
\ntax that part of the company's extracted material used for
\ncommunity development programs. Consequently the ultimate
\nsignificance of the settlement remains unclear. This column might
\nnot be the place to carry on an extended debate on finer legal
\npoints, but at another time and place I'd enjoy doing that with
\nMr. Ness.<\/p>\n
I am not sure that Mr. Ness's explanation addressed the
\nunderlying points of my article. Point One: foreign companies
\nwith large investments here sometimes feel that they are held
\nhostage by local officials who will not perform their official
\nduties responsibly (e.g. to issue permits expeditiously, to
\nprovide police protection against crime) unless they receive
\nextra payments in cash or in kind. Charging a company with some
\nviolation of law, in this case tax regulations; imposing an
\ninflated penalty; then offering the company a cheaper way out by
\nbargaining over the penalty: this is a favorite strategy of
\ncorrupt officials. Point two: Once a company begins operations it
\nis usually on the local level that problems of corruption,
\ncollusion and nepotism arise. For those corporations that do make
\na good-faith attempt to comply with their contract terms and with
\napplicable laws, the national appeals court system represents a
\ncompany's last best hope of fair treatment in the face of
\nrecalcitrant local officials. And here the system fails, as in
\nthose cases in which local governments flaunt the authority and
\nrulings of the central court or the ministry which agreed to the
\ncompany's terms of operation. This is what seemed to have been
\nthe situation in the Newmont case for several months, and I am
\nnot sure that Mr. Ness's letter has discussed this point. In
\ntruth, that may be a question better discussed in another forum.<\/p>\n
It's very gracious of Mr. Ness to invite me to observe
\ndiscussions on implementation of Newmont's new foundation. This
\nspeaks well of Newmont's seriousness about deciding matters that
\naffect the community in an open manner, rather than behind closed
\ndoors. I would like to accept that invitation by asking Mr. Ness'
\noffice to contact me via horizons@indo.net.id.<\/p>\n
DONNA K. WOODWARD<\/p>\n
Medan, North Sumatra<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/up-in-the-air-1447899208", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }