Down to Earth No. 38, August 1998

Bob Hasan's fall from favour

Just four months ago Bob Hasan was one of Indonesia's main power-brokers as President Suharto's right-hand man. But now that his benefactor and partner-in-greed has been forced out, Indonesia's top timber baron is being called to account.

Since the fall of Suharto, Bob Hasan's fortunes have been on the decline. He is under investigation on charges of corruption, has been told not to leave the country and has been stripped of his role in politics.

As Suharto's golfing partner and close confidant in recent years he was given the role of managing the Suharto money-machine. He had the task of clinching key business deals as well as sorting out squabbles among Suharto's children over contracts. His control of the Nusamba Group, one of the channels by which Suharto accumulated wealth, led him into partnerships with the likes of Freeport McMoran, miners of gold and copper in West Papua. Perks of his position included securing Rp 250 billion (then US $109 million) from the Reforestation Fund to invest in his East Kalimantan pulp mill. As head of several monopolistic timber trade associations, he was de facto forestry minister, making the real minister powerless to limit the excesses of the timber barons. In short, this brash, tough-talking man had a long way to fall when he found himself bereft of political protection. How hard his landing will be remains to be seen.

When Habibie became president, Hasan lost his cabinet position as minister of trade and industry. He had already relinquished some of his industry directorships, including his position in charge of Apkindo, the body that controlled Indonesia's lucrative plywood trade. Then, at the end of June Habibie expelled 41 members of the People's Consultative Assembly, or MPR, Indonesia's highest legislative body. Bob Hasan was one of them.

Hasan is not only having to cope with sudden and total loss of political influence and prestige in the business world: his financial dealings are also coming under close scrutiny. On July 3rd, he was questioned for two hours by officials at the Attorney General's office over the handling of Apkindo funds. The investigation concerns Rp 500 billion (currently US$ 33 million) which has not been properly accounted for. The funds were collected from plywood companies as levies on each cubic metre of plywood exported. A spokesman for the Attorney General said they had "just scratched the surface of the case" and were waiting for the result of an audit.

Two weeks before, a court in Medan, North Sumatra, had ordered Bob Hasan and his colleagues on the boards of three timber industry associations to pay a fine of Rp 50 billion. The case, brought by a number of peoples' organisations in the area concerned the damaging effects on the population of the smog caused by last year's forest fires.

In July came fresh accusations of corruption of siphoning billions of Rupiah from the paper producer PT Aspex Paper and of an associated cover-up of illegal logging by PT Indo Kayu in Central Kalimantan. The accusations were made by H Rusland, coordinator of the Reform Committee to Save State Funds (Korpera) in Central Kalimantan.

At the beginning of June, environmentalists staged a demonstration at the Forestry Ministry in Jakarta, demanding that Bob Hasan be taken to court on charges of "rampant exploitation" of the environment. The Suharto regime was accused of "looting and exploiting" the country's natural resources.

Reclaiming the Reforestation Fund

Hasan's use of the Reforestation Fund for his own business purposes has also come under investigation since the fall of Suharto. In June the new forestry minister, Muslimin Nasution said millions of dollars from the Fund were being retrieved or suspended, after an investigation into the way the previous administration had re-routed money into Suharto-linked firms. Muslimin says the sum Suharto signed over for Hasan's East Kalimantan pulp mill has been retrieved.

Other inappropriate recipients of the fund include Suharto's grandson Ari Sigit who got a Rp 80 billion loan for a urea tablet fertiliser project called PT Ario Seto Wijoyo. Rp 500 billion was also earmarked for the disastrous Central Kalimantan peat forest conversion project (see below); Rp 35 billion was given to the Consortium financing last year's Southeast Asian Games (chaired by Suharto's son Bambang). In 1996 Rp 23 billion was used to buy shares in PT Dua Satu Tiga Puluh, a company (headed by Suharto) set up to finance the construction of the N2130 jet made by state-owned aircraft manufacturer IPTN. The jet was known to be a pet project of current President, Habibie. A further Rp 400 billion was used to help finance IPTN's operations.

Suharto nextů

Hopefully, the investigation into Hasan's business dealings, starting with Apkindo, will extend into his management of Suharto's financial affairs and serve as a convenient entry point to the investigation of the Suharto billions. Nusamba, controlled by Bob Hasan is 80% owned by foundations controlled by Suharto and 10% owned by Suharto's son Sigit. Now the foundations are to be stripped of special privileges and are being audited by the Attorney General's office. As millions of hungry Indonesians are well aware, the country needs its money back now more than ever.

(Sources: Straits Times 25/6/98, Republika 10/6/98, Suara Merdeka 28/6/98, Singapore Business Times 1/7/98, Dow Jones Newswire 3/7/98, SiaR, Xpos 10/7/98, Waspada 19/6/98, Suara Pembaruan 16/7/98, Jakarta Post 7/7/98, SiaR 17/7/98)


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