On Freeport's violations

On Freeport's violations

According to recent reports, U.S. Ambassador Robert Gelbard
has complained to President Abdurrahman Wahid about allegations
from the attorney general and the finance minister of corrupt
practices by U.S. companies, PT. Freeport Indonesia in
particular. Ambassador Gelbard said he does not believe the
allegations -- as if corruption were like the tooth fairy,
something one has the option of believing in or not. Then,
sounding more like Andi Ghalib than like a statesman, the
ambassador warned that continuing accusations by Indonesian
officials would lead to the cancellation of U.S. investment in
Indonesia. Is Freeport's corruption a figment of Cabinet members'
imaginations?

Corruption takes many forms. But whatever form it takes we can
be sure that no corrupt deed is ever labeled "corruption" per se
by its perpetrators. If the ambassador is waiting for someone to
do this, he will never know about corporate America's Indonesian
corruption. Many U.S. companies began operations long before
there was a Foreign Corrupt Practices Act (FCPA) to constrain
their business practices. Corruptive practices ingrained over
generations of management are not easily eliminated, especially
if people will not acknowledge the problem. It is hard to believe
that Freeport has no problems, when other companies acknowledge
the pressures.

Does the ambassador want to know about corruption? In January
in an article in this newspaper, I suggested steps the United
States Embassy might take to encourage companies to report
corruption, collusion and nepotism (KKN). If any steps were
taken, they are being kept a secret. In February, two American
organizations cosponsored a forum in Jakarta on corruption and
business ethics. The President of Indonesia took the time to
address the gathering, as did the foreign minister, the attorney
general and other ministers and directors general; nearly 400
business executives were present. The Australian ambassador and
other diplomats stayed for most of the day. The U.S. ambassador
was conspicuous for his absence. There may have been a perfectly
good reason that Ambassador Gelbard was not personally available
on Feb. 17, but was there no other high level embassy
representative who could have shown support for Indonesia's
efforts against business-related corruption?

For a leading G-7 country to have missed this event seems
almost criminally negligent. Although the ambassador cries foul
when an American corporation comes under the spotlight for
alleged corruption, neither the U.S. Embassy nor the American
Chamber of Commerce here has taken much of a lead in assisting
companies to avoid corrupt and collusive relationships. Where
does this leave companies like Freeport if they do have unwelcome
problems? It leaves them with nowhere to turn.

The ambassador asked for proof of corruption. Unless the
ambassador follows his words with actions, the obvious conclusion
is that the words have public relations value only. He has blamed
people's reluctance to discuss problems on the provision of the
FCPA that requires the embassy to report violations to the
Department of Justice.

There is a time, sometimes even an obligation, for the embassy
to threaten disclosure of crimes. But this need not be the first
course of action; this strategy is sure to have a chilling effect
on companies' willingness to speak honestly. There are ways for
the ambassador to encourage companies to report problems before
their reports become self-incriminating. If, that is, the embassy
really wants to know what is going on. Rightly or wrongly,
Freeport has a poor public image. It and other American
enterprises are not well served by an ambassador whose words of
defense do not ring true.

DONNA K. WOODWARD

Medan, North Sumatra