Illegal military payments by Freeport/Rio Tinto

Down to Earth No 68  February 2006

Freeport, operator of the giant Grasberg goldmine in West Papua, is in the public spotlight once again over its financial relationship with the Indonesian security forces.

After almost forty years of largely fruitless protest, Amungme and Kamoro indigenous owners of the Freeport concession area in West Papua can be forgiven their cynicism at the latest push for accountability from the US-based mining company, Freeport. The Amungme, the traditional landowners of the Grasberg mine site, have been protesting since negotiations over the mine began. Protests against Freeport were recorded in 1967 even before the Contract of Work was signed between General Suharto and Freeport, and protests leading to the deaths of four people were recorded in 1968.^[1] Since then, hundreds of human rights abuses have been reported in the mine area.

During a recent interview in Jakarta, the respected Amungme traditional leader ('Mama') Yosepha Alomang demonstrated that she did not need to read the New York Times to know that although the government security forces [including police and military] receive three free meals a day from Freeport, they still receive generous "food allowances" and other payments. The payments were recently revealed to the wider world in an exposé by Jane Perlez and Raymond Bonner published in the New York Times.

According to interviews and accounting records obtained by Perlez and Bonner, Freeport paid around US$30 million to the military and police between 1998 and 2004. Most damning, those sources indicated that Freeport made payments of tens and hundreds of thousands of dollars into the pockets of numerous senior military officers, ostensibly for food or "military projects".^[2]

Freeport does not deny these payments in its letter responding to the NYT investigative report, instead asserting that "we disclose our financial support in a transparent manner" and stating that the security forces are "deployed and directed by the Government of Indonesia".^[3] In saying this, Freeport is severely stretching the truth to avoid the obvious conclusion that it has been making illegal, clandestine payments directly to public employees. In fact, despite what Freeport says, these direct payments were not publicly known before they were unearthed by NGOs and journalists. Indeed, in several cases, they have been denied by the recipients who seem to be aware that such payments are inappropriate.

Spying
Nor is it convincing when Freeport claims that the security forces are only directed by the government. Although on many occasions, security forces are a nuisance for Freeport, stealing from the company and running illegal businesses in the mine area, nevertheless the military sometimes certainly acts as if in the direct employ of the company. Soldiers are to be found travelling in company vehicles, frequenting company posts and have even been photographed wearing company uniforms.^[4] At Freeport's request, Indonesian military intelligence officers worked with Freeport to intercept phone and email communications by critical environmental NGOs.^[5] Security forces supported the company by interfering with a lawsuit launched by the Amungme leader Tom Beanal, stealing affidavits before they could be sent to the Amungme's US lawyer Martin Regan, and having the lawyer deported from the province when he attempted to meet his clients personally. Security forces prevented Yosepha Alomang from departing to present Amungme grievances to the Rio Tinto AGM in London. Security forces also deported US human rights investigator Abigail Abrash, reportedly at the request of Tom Green, an ex-US military attaché whom Freeport recruited at the suggestion of another staffer, a former CIA operative.^[6]

Investigation
In 2003, Freeport was forced to admit it made payments to the Indonesian military and police of over US$11 million during 2001-2002 (see DTE 57). Last year, Global Witness reported that the company had made payments to individual military and police officers. The NGO called for Freeport to be investigated under US and Indonesian laws (see DTE 66 and www.globalwitness.org/reports/show.php/en.00077.html). The NYT's latest revelations have lent weight to this demand.

The Indonesian environmental NGO WALHI, which has engaged in legal battles with the company in the past, has welcomed the announcement of the Parliamentary Standing Commission on Environment's plans to reopen an enquiry into Freeport. Enquiries have also been announced by the Minister for Mining and Energy and the Minister for Environment.^[7] Finally, an internal defense investigation is underway into Freeport's direct payments to commanders. This investigation is under suspicion, however, because the Inspector General of the Indonesian Army, Major General Mahidin Simbolon, who is ordinarily responsible for such investigations, apparently received direct personal payments of one quarter of a million dollars from Freeport during his time in Papua between May 2001 and March 2003.^[8]

Commenting on this news, Yosepha Alomang expressed little confidence in a new parliamentary enquiry, based on previous visits organised by Freeport at the request of parliamentarians. According to Alomang, such visits showcase employee residential areas such as Kuala Kencana - the construction of this area required the forced relocation of indigenous people from their traditional lands. "They (parliamentarians) don't visit where we indigenous people live, they just stay at the Sheraton and see what the company shows them. It's a waste of time." she said.^[9]

Notes

1. UNCEN-ANU Baseline Studies Project, Appendix #1, Amungme Bibliography, 1998.
2. Perlez, Jane and Bonner, Raymond, 'Below a Mountain of Wealth, a River of Waste', The New York Times, Dec 27, 2005
3. Adkerson, Richard, CEO Freeport McMoRan Copper & Gold Inc, letter to editors of NYT, Jan 11, 2006.
4. Leith, Denise. The Politics of Power; Freeport in Suharto's Indonesia. University of Hawai'i Press, 2003.
5. Perlez and Bonner, op cit.
6. Leith, op cit.
7. Govt to Set Up Team to Study Freeport Case, ANTARA News, Feb 08 2006; 
8. Paying For Protection, The Freeport Mine and the Indonesian Security Forces, Global Witness, July 2005.
9. Alomang, Yosepha. Interview by the author, Jakarta, February 2006.

(For more information about Yosepha Alomang, see DTE 63)