Probing Soeharto Inc.

Probing Soeharto Inc.

President B.J. Habibie's response to the nation-wide clamor
for an investigation into the wealth of former president
Soeharto, his family and cronies is not the kind of action
demanded by the people. The investigation, as disclosed by
Attorney General Soedjono C. Atmonegoro in a studiously worded
statement to the mass media Monday, seems to be already defect by
its design.

Although we welcome Soedjono's reaffirmation that rule of law
and the presumption of innocence will be upheld during the
investigation, we have doubts about the credibility of the
investigators.

The investigation is being conducted only by officials from
the attorney general's office in cooperation with related
government offices. Missing from the investigation team are
auditors from the Supreme Audit Agency and independent analysts
with the technical competence needed to look into numerous
documents and complicated financial reports to uncover the truth.

We are already all too familiar with the utterly poor record
of the attorney general's office in pursuing corruption cases. It
was, after all, subordinated to the wishes of Soeharto during his
more than 32 years in power. Although domestic and international
surveys have voted the Indonesian government as one of the most
corrupt in the world, very few major graft cases have so far been
brought to court.

The fact that Soedjono's statement did not mention anything
about President Habibie himself also adds to our doubts. We get
the impression that Habibie may escape the investigation
altogether, though he is widely reported to have built a vast
array of more than 80 businesses for his family. Many of these
are based in Batam island, a special economic zone southeast of
Singapore which has been under the virtual control of the Habibie
family since the mid-1970s. So far, Habibie has yet to produce
documented evidence belying media reports on what has been dubbed
as "Habibie Inc.". He has, instead, always imposed the burden of
proof on his critics.

It is most urgent to quickly establish the credibility of the
investigation team from the outset to cool down the hurly-burly
of the current movement against nepotism, corruption, collusion
and crony capitalism. The fury directed against Soeharto, stoked
by the almost daily reports uncovering his huge business empire,
may run out of control to the degree that people may look to take
the law into their own hands.

We cannot afford this kind of frenzy because it would
literally affect just about every sector in the economy since it
is being discovered that Soeharto's family and cronies are
engaged in businesses ranging from satellite communications,
power, toll roads and document printing to oil and gas,
transportation, food, pharmaceuticals, petrochemicals and
plantations, to name just a few.

An indiscriminate dismantling of the Soeharto business empire,
which includes joint ventures with foreign investors from around
the world and companies listed on stock exchanges, could become a
disastrous distraction. We cannot afford such confusion,
especially now when the nation badly needs to revive the business
sector, attract new investments and woo ethnic Chinese
businesspeople to bring their capital back home. The banking
industry, already crippled under a huge burden of bad loans,
could plunge into total collapse in view of the extensive
exposure of the Soeharto business empire to private and state
banks.

Soedjono did not elaborate on his investigation team's agenda,
but in view of the explosive allegations of pervasive corruption
against Soeharto, the attorney general should obviously give top
priority to probing the Soeharto family's wealth to ascertain
whether their riches -- estimated between US$20 billion and $40
billion -- were amassed through corruption and other forms of
malfeasance. Next on the agenda should be the riches and
businesses of President Habibie and his family. But most
importantly, as we asserted at the outset, the investigation team
must be perceived by the public as credible.

But to put the issue of nepotism, corruption, collusion and
crony capitalism into the right perspective, the attorney
general's investigation, which may take months or even years to
complete, should be separated from more urgent measures dealing
with the murky businesses which form a big chunk of Soeharto Inc.
These measures should fall under the reform actions being taken
by various ministries, state companies and local administrations
to improve overall economic efficiency and create a level playing
field for businesses.

The government and state companies could simply refer to
existing laws and regulations in dealing with or abolishing
monopolies, cartel-like businesses, rent-seeking practices,
special favors and licenses, tax exemptions and contracts awarded
without competitive bidding. After all, these kinds of shady
deals are clearly market distortions which are supposed to be
abolished under the reform package agreed to with the
International Monetary Fund.