The Guthrie deal: Land laundering

The Guthrie deal: Land laundering

Your editorial Guthrie deal finally closed (March 9, 2001)
misses the point somewhat.

If (some of) the lands for the plantations were taken without
the agreement of the original owners, then the Salim Group never
obtained legal title. Therefore, the Indonesian Bank
Restructuring Agency (IBRA) had no authority to sell the land on
the group's behalf and consequently Guthrie has acquired ...
nothing. In fact, Kumpulan Guthrie Bhd. could cancel the deal and
sue IBRA for damages resulting from misrepresentation.

Under Indonesian law, there is no contract if there is no full
agreement between parties. If, in a land sale, there is no
agreement on the purchase price, legal title to the land cannot
pass to the buyer. The buyer can never become owner if he is
aware (bad faith) that the purchase was not based on true
consensus, even if the sale is registered at the land office
("negative" land registration system) or after years of
possession.

Usually such "buyers" claim that the protesting farmers were
merely squatters on state land. In most countries, people who
occupy unclaimed land for, say, 20 years, can become true owners.
In Indonesia such provisions were abolished. Farmers who had
occupied land for 40 years or 50 years could still be evicted as
squatters to make way for plantations, golf courses, etc.
However, government regulation 24/1997 on Land Registration again
states (article 24:2) that occupation of land for 20 years or
more is equal to ownership, provided one truly believes that one
has acquired the land legally (good faith), and no objections are
raised by others (including by government) during that time.

Ministerial regulation (No. 5/1999) acknowledges the communal
land rights of traditional communities (generally known as hak
rakyat) and the principle that communal land can only be used
with the approval of the community. The regulation implies an
obligation to give land back to communities after it has been
abandoned by the temporary user/investor.

The Jakarta Post praises the Guthrie deal, but considers none
of these issues, although the legacy of stolen land looms over a
large portion if IBRA's assets. Ignoring people's grievances will
damage "investor confidence" much more than a called-off deal
with Guthrie. No investor wants to discover that he is doing
business on disputed land.

If the farmers are right, then part of the US$387 million
should be used to compensate them. That would repair the legal
flaw underlying the deal, protect Indonesia's reputation and
restore faith among all the people whose land rights were ignored
during Indonesia's past era of rapid growth.

PIETER J. EVERS

Jakarta