Military protection funds exposed

Down to Earth No 57  May 2003

The US mining company Freeport McMoRan has been forced to reveal how much protection money it pays to the Indonesian military and police.

Security forces paid to guard the Freeport/Rio Tinto-owned gold and copper mine in West Papua, stand accused of involvement in human rights violations, including extra-judicial killings, disappearances, torture, and rape. These crimes have not been properly investigated and those responsible have never been brought to justice.

Campaigners have long been critical of the company's financial relationship with the Indonesian military, which, in effect, pays the wages of human rights abusers. Until now, the company has not revealed the level of payments it makes, but, following a shareholder action by New York City public pension funds, Freeport has been obliged to say how much it hands over to the security forces.

Freeport paid a hefty US$5.6 million in 2002 and US$4.7 million in 2001. According to the company, the money paid for infrastructure, catered food and dining hall costs, housing, fuel, travel, vehicle repairs, allowances to cover incidental and administrative costs and community assistance programme conducted by the military and police. Only 'a small amount' was given to soldiers as cash allowances, the company said. But TNI spokesman Maj-Gen Sjafrie Sjamsoeddin said as much as 20% of the funds were given as cash allowances to soldiers assigned to protect Freeport/Rio Tinto's 2,800 sq km concession, with each receiving $39 per month.

The Free Papua Organisation (OPM) says that, in the light of this information, it is looking at the possibility of reopening human rights legal action against Freeport.

The company has been making the payments since it started operations in the 1970s. Security was stepped up following the 1996 kidnapping of Indonesian and foreign researchers. Last year over 2,000 security personnel were reported to be deployed at the mine. Last August's killing of three mine employees, the October 2002 Bali bomb, and, most recently, the US-led invasion of Iraq, has prompted Freeport and the Indonesian government to tighten security further.

"For $5.6 million a year, soldiers deployed around Freeport may as well call themselves the Freeport Army" 

(Jakarta Post Editorial, 20/Mar/2003)

At first, senior members of the Indonesian military denied that Freeport was paying so much. Armed forces commander Gen Endriartono Sutarto said Freeport had paid for food and pocket money for one battalion (700-800 men) who guarded the mine. Papua commander Maj-Gen Simbolon joked that if he'd received that much money, he would build a grand hotel and special barracks for the troops. He said his men were paid just Rp 125,000 (US$12.50) per month. But he also said it was entirely appropriate that Freeport should pay wages to the soldiers in addition to the pay they received from the armed forces.

National police chief, Gen Da'i Bachtiar admitted that police personnel also receive monthly allowances from Freeport, saying that the funds were used to build a station for the rapid-response Brimob (police mobile brigade) in Papua.

The revelations sparked public criticism of the military's business activities. A defensive Gen Endriartono blamed the low military budget, saying that "the military will happily leave our businesses once the country is able to provide us with a sufficient budget." The structural problem of the military budget (just 25%-30% of the money comes from the state budget) is of course just one side of the story. Corruption and intimidation are another. According to a source in the Defence Ministry, "enforcing the law on the military over their shady businesses is very hard because either the law enforcers - the police and the prosecutors - are getting cuts from the businesses or they are just too scared." The new armed forces legislation (see also box, Tangguh article), if passed, will see this situation becoming worse, with military power further enhanced.



The military's business relationship with the corporate sector invites rent-seeking behaviour by the military, where security guards may provoke conflict in order to justify their presence at the site or demand more money. There is widespread speculation that the killings of Freeport staff at Timika last August may have been motivated by money and that the killings were carried out by members of the military to warn Freeport not to reduce security payments.

Meanwhile, it'll be business as usual at the Freeport/Rio Tinto mine. Gen Endriartono said the military would continue to protect Freeport interests with or without the company's financial assistance because it is a "vital national asset". Whether or not they continued payments, he said, was "up to Freeport," he said, "but we would welcome the good will from Freeport." Is this an invitation that Freeport really can't refuse?

(Source: AFX Global Ethics Monitor, 14/Feb/03; Jakarta Post 13,16,19&21/Mar/03; Papua Post 17/Mar/03; Radio New Zealand International 18/Mar/03; Straits Times20/Mar/03;)


ExxonMobil, Caltex, Riau Andalan

The practice of paying for military and/or police guards is not uncommon in Indonesia. Many large commercial operations have poor relationships with local communities due to the practice of forced eviction of local landowners, failure to pay compensation or deal with pollution incidents and lack of effective dispute resolution mechanisms. Instead of trying to reach negotiated solutions, companies pay police or military security guards to deal with local opposition. - a situation that often results in intimidation and violence against the surrounding communities.

ExxonMobil's implication in gross human rights violations against local people in Aceh is currently the subject of a US lawsuit brought by the International Labor Rights Foundation on behalf of Acehnese victims (see DTE 50). Exxon has not made public how much it pays the Indonesian military security force guarding its operations but, in 2000, the Acehnese human rights organisation, Kontras, said the company paid around $529,000 per month for military and police operations, plus $4 a day 'pocket money' per person.

In the oil-rich Sumatran province of Riau, local council leader Tabrani Rab said the US oil company Caltex is paying between Rp 8bn (about $898,000) and Rp 9bn per year. Caltex confirmed that it was paying both the police and the military, but refused to say how much. The company's Riau operations have been hit by strikes and protests over land, employment and environmental impacts in recent years (see for example, DTE 48). In 2001 the company called in the Danish private security company Group 4, to deal with the problems. "Every time I accompany people whose land has been taken by Caltex", said Rab, "I don't meet the company's management. Instead I have to face Riau police's mobile brigade…"

The pulp mill operators Riau Andalan Pulp and Paper (part of the APRIL group) also has a financial relationship with the local police. According to Rab, the company donates equipment to the local police and, in return, the police take no action to stop the company's damage to local public roads. Last year the company donated 2 Toyota vehicles to the police. 
(Jakarta Post 24/Mar/02)


Right to Know campaign

A joint report by leading US NGOs has launched a campaign to push American businesses to disclose information on the environmental, labour and human rights practices of their overseas operations. A report published by Amnesty International USA, Earthrights International, Friends of the Earth US, Global Exchange, Oxfam America and Sierra Club, is called "International Right to Know; Empowering Communities Through Corporate Transparency". The report includes case studies on Freeport, Exxon-Mobil, Newmont and Unocal - all companies with poor human rights and/or environmental records in Indonesia. The report is at


Publish What you Pay Campaign

This campaign is pressing international oil, gas, and mining companies to publish net taxes, fees, royalties, and other payments to governments in countries where they operate. The aim is to enable civil society to more accurately assess the amount of money misappropriated and to lobby for full transparency in government spending.

The campaign wants to help citizens hold their governments accountable for how these resource-related funds are managed and distributed. The coalition of more than 80 NGOs involved in the campaign places the onus on wealthy countries' governments to require transnational extraction companies to publish this information. For more information see


Indonesian NGOs call for investigation

A joint statement by 11 Indonesian organisations accused multinational companies of being directly involved in human rights abuses: "The payment of money by Freeport to the armed forces and the fact that the armed forces have been able to make use of transnational facilities when violating human rights and committing violence means that the transnationals are themselves directly involved in and contribute towards this violence and these abuses." The statement, which was signed by the environmental NGO WALHI, the indigenous people's organisation AMAN, the mining advocacy network, JATAM and others, pointed out that other companies are doing the same thing and could not "hide behind the armed forces and police" and say they're not involved in violence and abuses.

The statement calls:

  • on the Indonesian parliament to summon Freeport and military leaders to make a public clarification;
  • for an independent investigation to look into unofficial payments by other transnational companies operating in Indonesia;
  • for the national human rights commission (Komnas HAM) to investigate human rights violations committed close to mining operations and the role of the companies in these events in the form of payment or provision of facilities;
  • for all mining companies to make their financial accounts public; for the government immediately to give an account of the use of unofficial funds to the public.
(Joint statement 19/Mar/02, signed by Kontras, Imparsial, JATAM, MPI, WALHI, ELSAM, AMAN, APM, ICW, YAPPIKA, LSPP, YLBHI)


Company Payments Source
Freeport US$5.6m (2002) $4.7 million (2001) Freeport, Jakarta Post, 13/Mar/2003
ExxonMobil US$529,000/month + $4/day pocket money pp Kontras, Petromindo, 21/Nov/01
Caltex US$898,000 - 1m/ year ($2.2m in 98-99) Tabrani Rab, Jakarta Post 24/Mar/03
Riau Andalan US$111,000 in vehicles and computers 98 Tabrani Rab, Jakarta Post 24/Mar/03