Focusing on Bulog, Brunie scams

The following is the first of two articles by George J. Aditjondro on how the administration of President Abdurrahman Wahid and Megawati Soekarnoputri has failed earlier expectations in eliminating the corrupt practices of their predecessors.

NEWCASTLE, Australia (JP): On Jan. 16, the House of Representatives' special committee on the "Bulog-gate" and "Brunei-gate" scandals, will table the results of its investigations.

President Abdurrahman Wahid will be asked to respond to the corruption allegations, which may lead to an impeachment of the President, the first of its kind in Indonesian political history.

However, is this whole affair not too politically motivated, to cover up for old and new vested interests? Or is it simply a drama of horse trading, to distribute the corruption pie more widely?

To answer those questions, let us look at the allegations which, thanks to the reformasi movement -- and sophisticated information technology -- can be accessed more easily than during the era of highly centralized corruption under the Soeharto oligarchy.

Contrary to expectations of the Indonesian pro-democracy movement, Abdurrahman and Megawati's administration have not achieved much in eliminating the corrupt practices of their predecessors, or in bringing the perpetrators to justice.

The former dictator, Soeharto, who was officially accused of embezzling Rp 1.38 trillion and US$420 million from seven charity foundations he chaired (Kyodo, Aug. 30, 2000) has been let off the hook due to health reasons.

Meanwhile, his youngest son, Hutomo Mandala Putra, also known as Tommy Soeharto, who has already been sentenced by the Supreme Court to 18-months imprisonment for a US$11 million (A$20.5 million) property scam, has been allowed to slip through the net and is still a fugitive at the time of writing this chapter.

As if adding insult to injury, the President has personally interfered in cabinet sessions to absolve three top businessmen -- Marimutu Sinivasan (Texmaco Group), Syamsul Nursalim (Gajah Tunggal Group), and Prajogo Pangestu (Barito Pacific Group) -- from any legal sanction despite their huge unpaid loans to the Indonesian state banks.

Their loans were part of the Rp 144.536 trillion of liquidity funds (BLBI = Bantuan Likuiditas Bank Indonesia) distributed by the central bank (Bank Indonesia) to 48 private banks and introduced in March 1998, which caused losses to the state coffers of around Rp 138.4 trillion or 97.5 percent of the total BLBI funds (Detikworld, Jan. 3, 2000; Panji Masyarakat, Oct. 18, 2000: 32).

In a manner similar to Soeharto, members of Gus Dur's inner circle of friends amassed Rp 35 billion from Yayasan Bina Sejahtera (Yanatera), a pension-and-savings fund operated by the food-distribution agency, Bulog. Hence, this scandal became known as "Bulog-gate."

Suwondo, the person to whom the Bulog charity funds were allocated, is also a major shareholder in a new airline company, Air Wagon Airlines, established by Gus Dur in late September 1999, before becoming president.

So, suspicions were raised that a part of the funds were not used to pay for humanitarian projects in the troubled province of Aceh - -as claimed by the President -- but used instead to finance the newborn airline (Straits Times, June 1 & 9, 2000; Indonesian Observer, June 8, 2000; Jaknews, June 27, 2000; Jakarta Post, Sept. 20, 2000).

As in the case of the "Bulog-gate" scandal, humanitarian projects in Aceh became the rationale for the President to accept a $2 million gift from Sultan Hasanal Bolkiah of Brunei Darussalam.

Obviously, it added another target on the hit list of the House and the media, which dubbed this second scandal, "Brunei- gate."

Consequently, after the Aceh Governor, Ramli Ridwan, stated that local authorities had not received any of the Rp 825 billion earmarked for humanitarian assistance in the trouble province, and it turned out that the Bruneian donation was handled by another private businessman friend of the President, 237 legislators decided to set up a special committee to investigate these two scandals -- "Bulog-gate" and "Brunei-gate" -- which signaled a move to impeach the President (Tempo Interaktif, June 7, 2000; Detikcom, June 8, 2000; Business Times, June 14, 2000; Reuters, July 11, 2000; Straits Times, July 14, 2000; Jakarta Post, June 13, July 18, Nov. 30, Dec. 5 & 8, 2000).

These two scandals were not the only indications of the President's (alleged) corrupt practices. He has also promoted a brother, Wahid Hasyim, a man with little to no financial or economic experience, to become a debt collector for the Indonesian Bank Restructuring Agency (IBRA).

This appointment attracted so much flak that Hasyim himself eventually resigned, after IBRA's Ombudsman summoned the President's brother and IBRA's chief, Cacuk Sudarijanto, who had allegedly been promoted to that position due to Hasyim's lobbying efforts (Suara Pembaruan, May 6, 2000; Jakarta Post, May 19, 2000; AFP, May 15 & 19, 2000; Reuters, May 15-16 & 22, 2000; Gamma, May 17-23, 2000; Far Eastern Economic Review, June 15, 2000; www.berpolitik.com, May 16, 2000).

Out of IBRA has not meant out of government-linked businesses for this younger brother of the President, who never finished his religious or his economic education.

His name has been mentioned in the media in relation with Abdurrahman's attempt to revive the national car project, formerly a joint venture between Kia Motors of South Korea and Tommy Soeharto.

One of the contenders to replace Tommy's share in this ill- named and ill-fated "Timor car" project is Tomy Winata, whom Wahid Hasyim has called his close friend.

This contender is planning to involve members of Wahid's Nahdlatul Ulama, through the organization's Economic Institute which had already approached producers of automotive components in Tegal and Klaten, Central Java.

Hence, at the time of writing this chapter it seems that in contrast to other contenders, Tomy Winata seemed to be the most likely winner in the bid to seize the Kia Motors assembly plant from the fugitive, Tommy Soeharto (Gamma, May 3-9, 2000, May 16, 2000; Media Indonesia, Dec. 11 & 14, 2000).

The 47-year old economic and political power broker is, however, not the only relative of the President who made it to the top.

Salahuddin Wahid, another younger brother of the President, an engineer who already had his own contracting business, obtained a contract from state-owned PT Bahana Pakarya Industri Strategis (BPIS) to develop a West Java industrial park (AFX - Asia, Oct. 12, 2000).

In that sense, the Wahid clan seems to have taken over from the Habibie clan, whose private businesses previously dominated contracts from the 10 strategic industries coordinated by BPIS, which until 1998 was directed by the former President.