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LAPINDO MUD DISASTER

 

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 ELECTIONS 2014

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LAPINDO SIDOARJO DISASTER

 

WHO IS RESPONSIBLE???

 

WHAT IS BEING DONE TO HELP THE VICTIMS????

 

 

 

 


Govt to Pay Compensation for Lapindo Mud Victims Before Eid Day
SUNDAY, 17 MAY, 2015 | 19:00 WIB



TEMPO.CO, Jakarta - Minister of Public Works and Public Housing Basuki Hadimuljono said that the bailout for the victims of Lapindo mudflow in Sidoarjo, East Java, will be paid.
He said that the bailout, which reaches Rp872.1 billion, would be paid before Eid al-Fitr Day this year.
“We’ve appointed a special team to speed up the compensation pricess for the victims,” he said on Saturday.
Basuki himself has been appointed as the chairman of the team.

The payment of the compensation is based on the verification result done by Development Finance Comptroller (BPKP). The BPKP verification result shows that Minarak Lapindo Jaya has paid compensation worth Rp2.7 trillion for an area of 420 hectares.

The government will provide the baidlout for Minarak Lapindo Jaya worth Rp827.1 billion and Minarak Lapindo is obliged to return the money in the period of four years.

 

 

 

 

Blog site for the victims of LAPINDO

 

 

 

 

AUDITING THE HOTMUD ERUPTION IN SIDOARJO

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


Lapindo book author forced to stay in hiding

Wahyoe Boediwardhana, The Jakarta Post, Jakarta
July 30 2012, 5:29 AM

The author of a book which criticizes Golkar Party Chairman Aburizal Bakrie for his poor handling of the Lapindo mudflow disaster in Sidoarjo, East Java, has been forced to live in hiding with his family for fear of possible retribution.

Taufik Budiman, who represented Ali Azhar Akbar, author of the book Lapindo File: Konspirasi SBY-Bakrie (Lapindo File: Conspiracy of SBY-Bakrie), said that after he was reported to be missing, Ali had sent messages that he had to stay in hiding and would only come out when the moment is right.
“The language that he used in the text message matched his style and we can be sure that the messages were sent by him. For now, we are grateful for the fact that he made contact, which means that he is still alive and safe,” Taufik told The Jakarta Post on Sunday.

Ali went missing after last making contact with his lawyer, M. Taufik Budiman, shortly before the launch of his book at the Bandung Institute of Technology (ITB) campus on June 20. Other reports say that Ali lost contact with Taufik two days before the event.
Ali is an environmental activist who wrote two previous books about the Lapindo mudflow, Konspirasi di Balik Lumpur Lapindo: Dari Aktor Hingga Strategi Kotor (Conspiracy Behind Lapindo Mudflow: From Actors to Dirty Tricks) published by Galang Pers in 2007 and Lapindo File published by Indopetro Publishing House in
May. In his book, Ali argued that an accident in the drilling activity on May 26, 2006, by Lapindo Brantas Incorporated (LBI), owned by Golkar Party chairman and tycoon Aburizal Bakrie, was the cause of the mudflow.

Ali and his two colleagues filed a judicial review with the Constitutional Court citing Law No. 4/2012 article 18 on the 2012 revised state budget that allows for the channeling of state funds to deal with the mudflow.
Coordinator of the Commission for Missing Person and Victims of Violence (Kontras) Surabaya Andy Irfan Junaidi said late
last week that it was possible that Ali went into hiding with his family members because they were all out of reach.

“A few friends who have direct access to Ali said that his whereabouts were being kept a secret and that we should not try
to find him yet,” Andy said.
Andy said that Ali and his family could likely face threats from certain parties.
“This complicates our investigation because now we have to deal with a kind of threat that forced him to hide himself,”
he added. According to Andy, it is possible that Ali’s activism and statements made him the target of intimidation.
“He received several death threats via text messages or cell phone before and after the book launch and the judicial review,” Andy said.

Kontras national coordinator Haris Azhar, said that Ali’s disappearance indicated that missing person cases could still occur in a democratic society.
“This incident proves that missing persons cases can still happen long after 1998. The perpetrators who kidnapped people during the New Order era remain free until now. There is no deterrent effect, because they were not being punished,”
Haris told the Post.
Haris was referring to chief patron of the Greater National Movement (Gerindra) Party Prabowo Soebianto, who was once
held accountable for the disappearance of pro-democracy activists in the twilight of the New Order regime.

Prabowo has even wanted to run for president. It goes to show that missing person cases are considered commonplace,”
he added.
Haris said that currently there were laws that could protect individuals from being abducted.

“The mass abduction that happened during the New Order would be unlikely to happen today, but there is still a chance,“
Haris said.
Last week, a victim of the Lapindo mudflow made a shocking move by apologizing to Aburizal on national television.
Hari Suwandi, who walked 827 kilometers from Surabaya to Jakarta, apologized to Aburizal for besmirching his family name
in the protest.

Responding to Hari’s about-face, Bakrie said on Sunday that history would finally vindicate him. “It’s getting clearer, which is right and which is wrong.
I was accused of colluding with Gayus. Gayus had recently spoken out himself,” Bakrie said, referring to junior tax official Gayus Tambunan. (nad)

 

 

 

 

The Lapindo Titanic

Monday, 01 August 2011 00:00
Bosman Batubara
Edition 105: Jul - Sep 2011

Bosman Batubara

The struggle waged by the Lapindo mudflow victims has been a long and exhausting one. For almost four years, displaced villagers from Sidoarjo have been pressing PT Lapindo Brantas to deliver on compensation for their sunken assets – a feat made the more challenging by the fact that even Indonesian law, a citizen’s last protector and refuge, has betrayed them. Determined to tell the world about what it’s like to cope with disaster day by day, Gus Maksum – a survivor of the now lost village of Jatirejo – has published a memoir, Titanic Made by Lapindo.

 

 

Gus Maksum is a local Kiyai, a teacher, and a writer. Before the onset of the mudflow on 29 May 2006, he was responsible for approximately 500 students at the school in Jatirejo that he headed. When disaster struck he hastily moved his classes to Krembung, another sub-district in Sidoarjo, but also began using his time to keep a careful record of his own experiences and those of other victims.

Although the Indonesian media have followed the Lapindo mudflow disaster closely, stories in the press do not delve nearly as deep as Gus’s memoir. For me, reading the book felt like having a personal and profound dialogue with one of the victims. The author helps the reader to see many things, ranging from problems caused by the loss of the village mosque to the implications of compensation never received. He includes stories of life in the refugee camp, and what dike construction really meant to the villagers. In his artfully titled chapter, ‘It’s all about the project, mate!’, he vividly describes how, in the eyes of mudflow victims, efforts at mitigation appeared to be little more than a game that attracted politicians and business people ready to exploit chaos for self-interest.

The fact that this book – a first-hand, personal account of the disaster as experienced by its victims – should exist at all is truly remarkable. Many people have written about the Lapindo mudflow disaster, but most were merely temporary observers. Clearly an author’s position in relation to a subject fundamentally shapes the outcome of his or her work. An observer is an observer; that is to say, detached. This book, however, was born from the lived experiences of the disaster’s victims, people who spent each day caught in the struggle to survive the enormous physical, emotional and financial impact of the Lapindo mudflow.
No justice

In 2009, the East Java Regional Police decided to issue an ‘Order to Stop an Investigation’ (SP3), thereby ending a criminal investigation into PT Lapindo Brantas’s responsibility for the mudflow disaster. From a legal point of view, the pendulum seems to have made a powerful sweep away from justice for the people and towards victory for the gas and oil giant. The SP3 implicitly states that PT Lapindo Brantas is not responsible for the mudflow on the grounds that the disaster was naturally occurring and neither industrial nor man-made. The fact that the regional police would back an order such as the SP3 may come as no surprise to the mudflow victims for, as Gus Maksum argues in his book, ‘The villagers believe that the ultimate goal [has been] to remove the people from their village’. At this point, the East Java Regional Police are clearly more concerned with the interests of PT Lapindo Brantas than with those of the victims.

The SP3 has lent a new air of credibility to PT Lapindo Brantas’s denials of culpability. It has allowed the firm – owned by Aburizal Bakrie, a former minister and one of Indonesia’s richest individuals – to continually postpone the payment of compensation that it is obliged, under Presidential Regulation 14/2007, to provide to mudflow victims for their losses. Under that regulation the government ordered Lapindo Brantas to pay for damage to villagers’ property by compensating losses in two payments: 20 percent of the total amount immediately following the order, and the remaining 80 percent in a second payment one month before the displaced households faced the end of their two-year home rental contracts in July 2008.

From the disaster’s earliest days, scientific experts have been collecting and reviewing data in an effort to deduce the origins of the mudflow. While it does not seem likely that the global community of geoscientists will reach a united conclusion any time soon, the debate itself has become a hot political issue. On one side stand scientists who, much like Lapindo, assert that the mudflow was a natural disaster triggered by tectonic activity along the Watukosek fault during the Yogyakarta earthquake of 27 May 2006. Countering their claims, however, is a broader circle of scientific experts who point to growing evidence that drilling pressures caused an underground blowout in Banjar Panji-1 well, triggering the mudflow and therefore making it an industrial disaster. One of these scientists – Richard Davies, an expert on mud volcanoes at Britain’s Durham University – has led expert investigations into the mudflow and its effects on Sidoarjo since 2006. In June 2008 he went on record saying ‘We are more certain than ever that the Lusi mud volcano is an unnatural disaster and was triggered by drilling the Banjar-Panji-1 well.’ In February 2010, he and a group of experts made international news again by releasing a report outlining new evidence that an operating error committed by PT Lapindo Brantas was what led to the disaster.

The East Java Regional Police issued the SP3 despite the weight of expert opinion, and despite new evidence it has not yet been revoked. We have all become witnesses to the creation of a painful precedent, one in which the law fails to serve the best interests of victims. In cases like this, literature becomes an even more important and powerful public medium. It brings readers close to the lived experiences of those displaced by the mudflow disaster. Gus Maksum’s warm, conversational tone connects readers personally to more than just a moment in history: it connects them to the truth.

S.H. Maksum Zuber, Titanic Made by Lapindo, Yogyakarta: Lafadl Pustaka and The Taiwan Foundation for Democracy, 2009.

Bosman Batubara (http://annelis.wordpress.com) is a Masters student in the Interuniversity Programme on Water Resources Engineering, Katholieke Universiteit Leuven and Vrije Universiteit Brussel. He was formerly a community organiser at Lafadl Initiatives, working with victims of the mudflow on a women’s economic empowerment project. He would like to thank Rayna Rusenko for assistance in preparing this review.

 

 



Hundreds of mudflow victims halt Lapindo activities

The Jakarta Post, Jakarta | Mon, 10/03/2011

A protest involving hundreds of mudflow disaster victims from Besuki, Kedungcangkring and Pejarakan villages in Sidoarjo, East Java, has brought work to a halt at the Lapindo mudflow disaster site.

One of the protesters, Mudiharto, said the group had staged the protest in an effort to seek clarity from the Sidoarjo Mud Disaster Mitigation Agency on compensation payments that were supposed to have been given to disaster victims.

"They have only paid 70 percent of our compensation and we don’t know when they will pay the remaining 30 percent,” Mudiharto said Monday as quoted by kompas.com.

The disaster, which started in 2006, has caused massive loss of property after the mudflow buried multiple villages in the Porong area. The victims have been struggling to obtain compensation ever since.

Meanwhile, blame for the incident has been shifted away from a company conducting deep drilling in the area, Lapindo Brantas, which was widely believed to have caused the mudflow.

Lapindo has insisted that the mudflow began as a result of an earthquake that struck in Central Java.

 

 


Threat Level at Lapindo Mudlow Site Increases

Arientha Primanita & Antara | September 22, 2011

Authorities in East Java have raised the alert level for the mudflow spewing from an underground volcano in Sidoarjo after nearby dikes nearly failed.
The mudflow has destroyed hundreds of homes, swamped 720 hectares of land and displaced more than 11,000 people since it began erupting in late May 2006.

“The situation is alarming,” said Achmad Khusaeri, a spokesman for the Sidoarjo Mudflow Mitigation Agency (BPLS), adding that the underground volcano had begun to erupt again after lying virtually dormant for years.
The mudflow had fallen from an average of 100,000 cubic meters per day in 2009 to 13,000 cubic meters per day last year.

Achmad said the authorities had added another meter to the height of the dikes as well as reinforcing them with rocks held together by chicken wire. BPLS officers are also monitoring the dikes 24 hours a day.
Dwi Arisanto, an official at state railway operator Kereta Api Indonesia, said tracks along the disaster-hit area were being reinforced.
“We are also limiting train speeds to no more than 20 kilometers per hour,” he said.

East Java Governor Sukarwo said the surge was happening in eastern Sidoarjo, while in the west the mudflow had receded.
The provincial government, he said, was channeling the surging mud to the area’s less-populated south.
Sukarwo added that rain could also worsen the surging mudflow and cause the dikes to weaken.
The governor visited the Presidential Palace on Tuesday, urging the central government to push Minarak Lapindo Jaya, the holding company of the gas drilling operation that is widely blamed for the mudflow, to expedite its compensation scheme.

Under the scheme, residential land was valued at Rp 1 million ($113) per square meter, while farmland was valued at Rp 120,000 per square meter. However, Sukarwo said Lapindo had only paid compensation for 72 percent of the inundated lands, adding that he urged the company to pay for at least 80 percent by the end of the year.

“I will let the president, vice president and the ministers push for the compensation and I will try to calm down the people,” the governor said.

Sukarwo said Lapindo should disburse all of its compensation by April next year. Three villages are now completely submerged by the mudflow.

Separately, Public Works Minister Djoko Kirmanto said President Susilo Bambang Yudhoyono was expanding the area deemed to be devastated by the disaster.

The minister said that on Monday, there would be nine neighborhoods that would be added to the compensation scheme, costing an additional Rp 1 trillion to Rp 2 trillion.

 

 

 

 

LAPINDO MUD DISASTER

 

 

 

 

The Tragedy Of Lapindo

 Lapindo Mud and Bakrie's Responsibility

Indonesia Mud Disaster Caused By Human Error:

New study links drilling to Indonesia mud volcano

Author of Lapindo Conspiracy Book Reported Missing

Lapindo Mudflow Book's Author Still Missing

 

June 27, 2012

J

 

 

 

 

 

Poet turns down Bakrie Award
The Jakarta Post, Jakarta | National | Fri, August 03 2012,

Indonesian poet Seno Gumira Ajidarma followed in the steps of several intellectuals by refusing to the 2012 Achmad Bakrie Award, which comes with Rp 250 million (US$ 26,250) of prize money.
Seno stated in his website on Friday that he received an official letter from the award organizer, the Freedom Institute, on June 12, announcing him the winner for his exceptional works in literature.
“I wrote on June 18 to the Freedom Institute, saying it was better that the award was given to someone else that deserves it, because I cannot accept it,” Seno wrote in www.duniasukab.com, without further explanation.

Writer Djenar Maesa Ayu, actor Butet Kartaredjasa, poets Sitok Srengenge and Agus Noor lauded Seno’s action on the Twitter.
“Salute to Seno Gumira Ajidarma who refuses the Bakrie Award,” said Sitok in his account @1Srengenge.
“This [Seno’s refusal] is the most beautiful blessing on Friday,” stated Agus in ?@agus_noor.

Two years ago, noted poet Sitor Situmorang and social scientist Daoed Joesoef, also a former education and culture minister, refused to receive the award.
Daoed’s refusal was due to the connection of Achmad Bakrie’s son, businessman and politician Aburizal Bakrie, to the ongoing mudflow disaster in Sidoarjo, East Java since 2006.
In June 2010, poet, journalist and cultural critic Goenawan Mohamad returned the same award he was presented in 2004, along with Rp 100 million in prize money plus interest.
“I tried not to relate the award with what he does as a political figure and businessman, but the contradiction has gone too far,” he said previously.
In 2007, Catholic intellectual Rev. Franz Magnis-Suseno declined to receive the award due to the mudflow disaster.

For the past ten years, the awards have been given to prominent figures for their outstanding achievements in literature, medicine, science, technology and social fields. (yps)

 

 

 

 


Lapindo book author forced to stay in hiding

Wahyoe Boediwardhana, The Jakarta Post, Jakarta
July 30 2012, 5:29 AM

The author of a book which criticizes Golkar Party Chairman Aburizal Bakrie for his poor handling of the Lapindo mudflow disaster in Sidoarjo, East Java, has been forced to live in hiding with his family for fear of possible retribution.

Taufik Budiman, who represented Ali Azhar Akbar, author of the book Lapindo File: Konspirasi SBY-Bakrie (Lapindo File: Conspiracy of SBY-Bakrie), said that after he was reported to be missing, Ali had sent messages that he had to stay in hiding and would only come out when the moment is right.
“The language that he used in the text message matched his style and we can be sure that the messages were sent by him. For now, we are grateful for the fact that he made contact, which means that he is still alive and safe,” Taufik told The Jakarta Post on Sunday.

Ali went missing after last making contact with his lawyer, M. Taufik Budiman, shortly before the launch of his book at the Bandung Institute of Technology (ITB) campus on June 20. Other reports say that Ali lost contact with Taufik two days before the event.
Ali is an environmental activist who wrote two previous books about the Lapindo mudflow, Konspirasi di Balik Lumpur Lapindo: Dari Aktor Hingga Strategi Kotor (Conspiracy Behind Lapindo Mudflow: From Actors to Dirty Tricks) published by Galang Pers in 2007 and Lapindo File published by Indopetro Publishing House in
May. In his book, Ali argued that an accident in the drilling activity on May 26, 2006, by Lapindo Brantas Incorporated (LBI), owned by Golkar Party chairman and tycoon Aburizal Bakrie, was the cause of the mudflow.

Ali and his two colleagues filed a judicial review with the Constitutional Court citing Law No. 4/2012 article 18 on the 2012 revised state budget that allows for the channeling of state funds to deal with the mudflow.
Coordinator of the Commission for Missing Person and Victims of Violence (Kontras) Surabaya Andy Irfan Junaidi said late
last week that it was possible that Ali went into hiding with his family members because they were all out of reach.

“A few friends who have direct access to Ali said that his whereabouts were being kept a secret and that we should not try
to find him yet,” Andy said.
Andy said that Ali and his family could likely face threats from certain parties.
“This complicates our investigation because now we have to deal with a kind of threat that forced him to hide himself,”
he added. According to Andy, it is possible that Ali’s activism and statements made him the target of intimidation.
“He received several death threats via text messages or cell phone before and after the book launch and the judicial review,” Andy said.

Kontras national coordinator Haris Azhar, said that Ali’s disappearance indicated that missing person cases could still occur in a democratic society.
“This incident proves that missing persons cases can still happen long after 1998. The perpetrators who kidnapped people during the New Order era remain free until now. There is no deterrent effect, because they were not being punished,”
Haris told the Post.
Haris was referring to chief patron of the Greater National Movement (Gerindra) Party Prabowo Soebianto, who was once
held accountable for the disappearance of pro-democracy activists in the twilight of the New Order regime.

Prabowo has even wanted to run for president. It goes to show that missing person cases are considered commonplace,”
he added.
Haris said that currently there were laws that could protect individuals from being abducted.

“The mass abduction that happened during the New Order would be unlikely to happen today, but there is still a chance,“
Haris said.
Last week, a victim of the Lapindo mudflow made a shocking move by apologizing to Aburizal on national television.
Hari Suwandi, who walked 827 kilometers from Surabaya to Jakarta, apologized to Aburizal for besmirching his family name
in the protest.

Responding to Hari’s about-face, Bakrie said on Sunday that history would finally vindicate him. “It’s getting clearer, which is right and which is wrong.
I was accused of colluding with Gayus. Gayus had recently spoken out himself,” Bakrie said, referring to junior tax official Gayus Tambunan. (nad)

 

 


Lapindo Mudflow Book's Author Still Missing

Murizal Hamzah | June 27, 2012

More than a week after the author of the controversial book “Lumpur Lapindo File: Konspirasi SBY-Bakrie” (“The Lapindo Mud File: SBY-Bakrie Conspiracy”), Ali Azhar Akbar, was last seen in public, the writer’s whereabouts remain unknown.
He was last seen at the Constitutional Court in Jakarta on June 19, after filing a judicial review of Article 18 of the 2012 State Budget, which allows the government to use state funds to cover damages and compensation related to the 2006 Lapindo mudflow disaster.

“As of today, Ali Azhar’s whereabouts remain unknown,” Tjut Sukiadi, a close friend of Ali, told BeritaSatu.com on Wednesday.
He said Ali’s family and friends had made numerous attempts to find him, all of which had proved futile.
“Yesterday, [Ali’s] lawyer M. Taufik Budiman asked the National Police to protect Ali and his family,” Tjut added.
He again denied speculation that Ali’s disappearance was a publicity stunt for his books.

Ali has written two books related to the Lapindo mudflow disaster in Sidoarjo, East Java.
The first one provided background information on the events related to the disaster, while the second book was about an
alleged conspiracy between President Susilo Bambang Yudhoyono and Golkar Party chairman Aburizal Bakrie, whose family owns oil and gas company Lapindo Brantas.
The firm is widely blamed for triggering the Sidoarjo mud volcano that erupted in 2006, displacing thousands of families.


Bakrie is considered a strong contender in the 2014 presidential election.
BeritaSatu/JG

 

 


Aburizal shows off power

The Jakarta Post, Jakarta | Headlines |
Mon, July 02 2012, 7:46 AM

Golkar Party chairman Aburizal Bakrie made a show of strength after securing his party’s nomination for the 2014 presidential election.

In a well-choreographed ceremony at the Sentul International Convention Center in Bogor, West Java, the Golkar Party leadership meeting officially endorsed Aburizal as the only candidate from the party to contest the 2014 presidential election.
The endorsement was made after the party’s central board issued a warning against former vice president Jusuf Kalla, an active Golkar member and its former chairman, that it could expel him from the party if he sought a presidential nomination from another political party, a move that could deal a blow to Aburizal’s electability in the poll.
Kalla was not seen at the venue throughout the national leadership meeting.

The announcement was also staged to impress upon Golkar Party members that Aburizal was in control of the party, especially given the presence of former party chairman Akbar Tandjung, who until days before Sunday’s announcement had challenged Aburizal’s nomination.
Also present at the ceremony was embattled Democratic Party chairman Anas Urbaningrum, which sent a mixed message on the stance of President Susilo Bambang Yudhoyono’s party toward Aburizal’s candidacy.
Soon after securing the nomination, Aburizal delivered an hour-long speech that confidently outlined his program if he was elected president, called “Catur Sukses” (four points for success).
“I offer this concept, which has proven to be successful, called the ‘Development Trilogy’ and have added the idea of Indonesian nationalism,” Aburizal said, referring to the slogan of the New Order regime of former president Soeharto, which promoted the trio of steady economic growth, development equity and stability.

Aburizal set out that it was possible for the country to grow by 10 percent and that equitable development was possible only with the infusion of capital to small- and medium-scale enterprises, while stability could be achieved only through democracy.
On the issue of nationalism, Aburizal said that Indonesia could embrace the outside world only if it had confidence and dignity to do so.

Analysts, however, warned that the road to the country’s presidency would be a rocky one for Aburizal, who has long been dogged by the Lapindo mud flow disaster and a low approval rating among the electorate.
Political observer from Jakarta-based think tank Charta Politika Yunarto Wijaya said that the odds were stacked against Aburizal’s election in 2014.


Yunarto said that Aburizal’s reputation as a shrewd businessman would not help him during the election.
“People know Bakrie as a businessman and not a politician, with questionable political leadership qualities. On top of that, he received intensive media scrutiny over the handling of the Lapindo mud flow problem and rumors of several tax problems,” he said.
He also said that the fact that Aburizal was not Javanese would also count against his candidacy.
Aburizal hails from Lampung and comes from Malayan stock.
The Golkar chairman also had to face up to the fact that the party has never won a presidential election in the post-New Order period.

“Golkar has the tremendous task of winning the presidential election because candidates from Golkar have never won the presidential election in the reform era,” Yunarto said, adding that in 2014 Golkar also faced an uphill battle to win legislative elections after losing the top spot to the Democratic Party in 2009.
Yunarto also said that Golkar had to deal with consolidating factions in the party, which had splintered in the period leading up to Aburizal’s nomination.

This early nomination is aimed at consolidating opinion within the party and I doubt that it can be completed in the next two years,” Yunarto said, adding that the party would also not be able to improve Aburizal’s standing among voters in the next two years.
University of Indonesia’s political analyst Fachry Ali said that the early nomination of Aburizal was aimed at raising the popularity of the Golkar chairman among the majority of Javanese voters, as his chances of securing votes from them was relatively low.

“I suspect that Golkar is trying to direct public opinion with this early nomination, as the biggest obstacle Aburizal is facing right now is how he has to win the hearts of the majority Javanese population,” Fachry told The Jakarta Post on Sunday. (aml)

 

 


Aburizal Bakrie Named as Golkar’s Presidential Candidate

Markus Junianto Sihaloho, Rizky Amelia & SP/Robertus Wardi |
June 30, 2012

While a series of recent surveys show that Golkar will win the 2014 election, chairman Aburizal Bakrie, who on Friday was named the party’s presidential candidate, trails other figures in several polls.
Realizing that he has to boost his popularity as early as possible to have a chance of competing for the country’s top job with other contenders, Aburizal had been trying to force the party to name him as its only presidential candidate since late last year.
“We don’t want to be late. Golkar must decide its candidate now so that we have at least two years to boost our electability,” Aburizal told reporters during the party’s four-day national meeting in Bogor. “I accept the nomination to be the party’s presidential candidate.”

All of the party’s heavyweights and regional leaders attended the meeting.
Aburizal’s efforts to push his way through, however, has created tension inside the party, with old guards like former chair Akbar Tandjung showing disdain.
Akbar stated that he could do nothing to stop Aburizal’s ambition, and warned that such an “undemocratic” method of appointment could hurt the party’s image as a democratic and open party, thus lessening its chances of winning the election.

Muntasir Hamid, the chairman of Golkar’s Social Network Forum of Regional Chapter Boards, threatened earlier to push for an extraordinary congress if the party continued to insist on Aburizal as its presidential candidate.
According to Muntasir, there is far from unanimous support for an Aburizal candidacy, as several other officials at the regional level have also rejected the central board’s decision.

But Aburizal seems to be able to control regional branch heads with the idea of an extraordinary congress not being able to get wide support. The central board managed to push through the proposal to nominate the business tycoon.
Aburizal said that by nominating a presidential candidate now, the party was able to deal with internal conflict early, rather than during the election cycle.
“By having a definitive candidate now, we can focus ourselves on solidifying the party and winning the election rather than being trapped by disagreement near election time,” he said.
Some political analysts have also pointed out that with the early nomination, Aburizal and Golkar have plenty of time to look for a coalition partner and running mate to strengthen their chances.

Aburizal on Thursday named potential vice presidential candidate, including Mahfud M.D., chairman of the Constitutional Court; Yogyakarta Governor Sultan Hamengkubuwono X; East Java Governor Sukarwo; Gen. Pramono Edhie Wibowo, who is an Army Chief and President Susilo Bambang Yudhoyono’s brother in law; and Khofifah Indar Parawansa, a politician from the National Awakening Party (PKB), and chairwoman of the women’s wing of the country’s largest Islamic organization in the country, Nahdlatul Ulama.
“If he can get Yudhoyono’s blessing to get Pramono then he can combine the country’s two biggest parties, Democratic and Golkar,” said Fachry Ali, a political analyst from the Indonesian Institute of Sciences.

However, as the party held a meeting in Bogor, senior party members Zulkarnaen Djabar, Setya Novanto and Kahar Muzakir were implicated in graft cases.

 

 

 

Author of Lapindo Conspiracy Book Reported Missing

Faisal Maliki Baskoro | June 23, 2012

Ali Azhar Akbar, the author of the controversial book “Lumpur Lapindo File: Konspirasi SBY-Bakrie” (“The Lapindo Mud File: SBY-Bakrie Conspiry”), has been missing since Tuesday and thought to be kidnapped.

Mulyana Wirakusumah, a political analyst and a close friend of Ali said the author was last seen in public on Tuesday at the Constitutional Court after filing a judicial review of Article 18 of the state budget law, which allows the government to use of state funds to cover damages and compensation related to the 2006 Lapindo mudflow disaster.
“Families and close friends haven’t heard from him since then. It’s not like him to disappear for three days without getting in contact with anyone,” Mulyana said on Saturday.

 

 

Ali was supposed to attend book discussion at the Bandung Institute of Technology on Friday, but he did not showed up. His absence set off concerns for his safety.
Mulyana said that Ali, who is also a legal activist, received threats prior to his disappearance, but Mulyana stopped short from saying the disappearance is related to Ali’s book.
“The threats suggest that he was kidnapped, but it’s still too early to say. I just hope and ask the police to work quickly,” he said.

He said Ali has written two books related to the Lapindo Mudflow disaster in Sidoarjo, East Java. The first one provided background information and the events related to the disaster, while the second book was about a conspiracy between President Susilo Bambang Yudhoyono and Golkar Party chairman Aburizal Bakrie, who is linked with oil and gas company Lapindo Brantas. His business group range from coal mining to property.

Bakrie is also considered a strong contender in the 2014 presidential election.
Lapindo’s drilling activities in East Java is widely blamed for triggering the mud volcano in May 2006, which caused more than 10,000 families to abandon their homes.

The government never made an official statement about the cause of the disaster, but told the holding company, Minarak Lapindo Jaya, to pay compensation to victims. Lapindo has so far paid out Rp 2.5 trillion ($265 million).
The government itself allocated Rp 6.2 trillion from the state budget for the compensation process. This year’s state budget for the Lapindo mudflow is about Rp 1.5 trillion.

On June 15, the Constitutional Court began reviewing a provision in the state budget that allows the government to use taxpayer money to compensate victims of the Sidoarjo mud volcano in East Java.
“Ali is fighting to stop the government from using state money to pay for Lapindo’s mistakes,” Mulyana said.

Tjut Sukiadi, a close friend of Ali, denied the possibility that the author disappearance was a publicity stunt for the book.
“This is not a business strategy,” Tjut said.
Tjut added that several days ago, Ali told his friends that he had been receiving threatening text messages.

 

 

I

ndonesia Mud Disaster Caused By Human Error: Study
February 13, 2010

Paris. Drilling firm PT Lapindo Brantas, owned by Golkar Party chairman Aburizal Bakrie, was to blame for unleashing a mud volcano in East Java that claimed 14 lives and displaced tens of thousands of people, a major international study has concluded.
In a paper published by the journal Marine and Petroleum Geology, a group led by experts from Britain’s Durham University, said the new clues bolstered suspicions the catastrophe was caused by human error.

Lapindo Brantas maintained in the same journal that the “Lusi” mud volcano was unleashed by an earthquake at Yogyakarta, 280 kilometers away.
Lusi’s mud has been devouring land and homes in Sidoarjo district since May 2006, imperilling as many as 100,000 people through subsidence and inflicting damage at $4.9 billion, according to an estimate by an Australian expert.

Durham professor Richard Davies said drillers, looking for gas nearby, had made a series of mistakes.
They had overestimated the pressure the well could tolerate, and had not placed protective casing around a section of open well. Then, after failing to find any gas, they hauled the drill out while the hole was extremely unstable. By withdrawing the drill, they exposed the well hole to a “kick” from pressurised water and gas from surrounding rock formations.
The result was a volcano-like inflow that the drillers tried in vain to stop, he said.
“We found that one of the on-site daily drilling reports states that Lapindo Brantas pumped heavy drilling mud into the well to try to stop the mud volcano,” Davies said in a press release.

By pumping in this heavy mud, the drillers had hoped to create sufficient pressure in the column of the well hole to block the fluid pouring in from the rupture, Davies said.
“This was partially successful, and the eruption of the mud volcano slowed down. The fact that the eruption slowed provides the first conclusive evidence that the bore hole was connected to the volcano at the time of eruption.”
He added: “This is the clearest evidence uncovered so far that the Lusi mud volcano was triggered by drilling. We have detailed data, collected over two years, that show the events that led to the creation of the Lusi volcano.”
A co-author of the discussion paper, Michael Manga, a professor at the University of California at Berkeley, added the Yogyakarta quake was too small and distant to have caused Lusi. “The stresses produced by the earthquake were minute,” he said.

Arguments over the causes of Lusi have become a political issue in Indonesia. The House of Representatives in September 2009 said they had found no evidence of negligence on the part of Lapindo and declared that the mudflow was caused by a natural disaster.

In 2008, scientists from around the world at the conference of the American Association of Petroleum Geologists in Cape Town, including Davies, voted that the disaster was triggered by drilling activity.

JG, AFP

 

 

LAPINDO DISASTER

 


New study links drilling to Indonesia mud volcano
By Sunanda Creagh

JAKARTA | Fri Feb 12, 2010 1:33am EST

(Reuters) - A team of scientists said in a report on Friday that they had found the strongest evidence yet linking a devastating mud volcano in Indonesia to drilling at a gas exploration well by local energy firm PT Lapindo Brantas.
Lapindo has denied triggering the disaster through its drilling activities, arguing the mud volcano near Indonesia's second-biggest city of Surabaya was triggered by an earthquake.
The hot mud started spewing from the East Java drilling site in 2006 and has now displaced nearly 60,000 people.

A scientific team led by Richard Davies of Britain's Durham University said data released by Lapindo provided new evidence indicating that drilling caused the disaster.
"We found that one of the on-site daily drilling reports states that Lapindo Brantas pumped heavy drilling mud into the well to try to stop the mud volcano. This was partially successful and the eruption of the mud volcano slowed down," Davies said in a statement.
"The fact that the eruption slowed provides the first conclusive evidence that the bore hole was connected to the volcano at the time of eruption."

The team led by Davies had previously said in 2008 that it was almost certain drilling caused the disaster.
Mark Tingay, a member of the team who is based at Australia's Curtin University, disputed Lapindo's assertion that mud flow was partly triggered by an earthquake in the Central Java city of Yogyakarta two days earlier.
"The earthquake they claimed was responsible had trivial impact because of the distance" between Yogyakarta and the disaster site, he told Reuters by telephone. Yogyakarta is over 250 km (155.3 miles) south west of the mud volcano site.

Lapindo vice president, Yuniwati Teryana, said the research was wrong.
"They don't have complete data. There is no correlation between the mud eruption and Lapindo," she said, adding Lapindo's view was supported by a decision by Indonesia's Supreme Court in 2009 when it dismissed a lawsuit over the disaster.
"In the court we had several witnesses, including those for and against, who gave their opinion. We should all respect the court result."

Indonesian police also stopped last year a criminal investigation into whether drilling cause the disaster, citing a lack of evidence.

Teryana said Lapindo had already spent 6.3 trillion rupiah ($672.7 million) compensating those affected by the disaster.
The mud volcano has been particularly embarrassing for the government of President Susilo Bambang Yudhoyono, since Lapindo is linked to the Bakrie Group, controlled by the family of Indonesia's former Chief Welfare Minister Aburizal Bakrie.

Bakrie, a powerful businessman, is no longer a minister but is the current head of the Golkar Party, which is part of coalition in parliament supporting Yudhoyono.
The mud volcano has been particularly embarrassing for the government of President Susilo Bambang Yudhoyono, since Lapindo is linked to the Bakrie Group, controlled by the family of Indonesia's former Chief Welfare Minister Aburizal Bakrie.


(Editing by Ed Davies and Alex Richardson)

 

 

 

 


Insight: Indonesia Tycoon Bakrie Gears Up for Presidential Bid
Olivia Rondonuwu and Matthew Bigg | May 21, 2012

There are many ways to describe Indonesia’s Aburizal Bakrie: multi-millionaire businessman, global mining tycoon, heavyweight contender for the presidency in 2014. One description that does not spring to mind is man of the common people.
So when Bakrie strode into a railway station in South Jakarta last week and slapped the equivalent of one US dollar down on the counter for a ticket, it was a moment of political theater.
It also signaled an early step in the march to presidential elections in mid-2014 in the world’s most populous Muslim-majority nation. Secular Indonesia, a hot favorite of international investors, is a sprawling archipelago of vast natural riches, an increasingly wealthy middle class and an economic growth rate last year of 6.5 percent.

But in a country in which it is deemed unseemly to openly declare ambition, Bakrie, chairman of the nationalist Golkar Party, stressed he was merely testing the waters.
“It is not yet a campaign,” the 65-year-old told Reuters.
“The purpose of the trip is to give a speech, a motivation speech to ... high school students, to meet small vendors, to see also the agriculture, to see what their problems are so that I can tell my legislators,” he said.

In fact, Bakrie was doing all the things that politicians do on the campaign trail. He was also confronting what his aides say is an obstacle on the road to the presidency: the perception that as a member of Indonesia’s elite he is out of touch with the people.
Bakrie is one of Indonesia’s wealthiest men, ranked number 30 by Forbes magazine with a net worth of around $900 million. He is considered one of the most successful pribumi, or native Indonesian, businessmen in a country where commerce is dominated by ethnic Chinese.
Until 2004, Bakrie headed the mining, palm oil and telecommunications conglomerate founded by his father Achmad, that is associated with London-listed coal venture Bumi. Operations are now overseen by a brother.
Early opinion polls put Bakrie trailing in the list of possible candidates to take over from President Susilo Bambang Yudhoyono after his second and final term, but with the power of Golkar behind him and his own resources, he is seen as the man to beat.

Golkar, the second biggest party in Yudhoyono’s coalition, was the political vehicle of strongman President Suharto, who ruled the archipelago for over three decades until 1998.
Yudhoyono is yet to endorse a candidate from his Democrat Party; however there are some familiar names in the running.
The opposition Greater Indonesia Movement Party has named businessman and former general Prabowo Subianto, once married to a daughter of Suharto, as its candidate.
The opposition Indonesian Democratic Party of Struggle is divided in its support between former President Megawati Sukarnoputri, daughter of the country’s first president, and her own daughter, Puan Maharani.
Neither woman has said she will seek the party’s nomination.

Nomination
Bakrie, who has served in cabinet as Yudhoyono’s chief economic minister, has first to win Golkar’s nomination for 2014 at a convention likely next month. To do so, he must overcome resistance in part from senior party leader Akbar Tanjung, but that is not seen as a problem.
“He is very likely to become the presidential candidate because nobody is as strong as him in Golkar,” said Sunny Tanuwidjaja of the Center for Strategic and International Studies, a think-tank based in Jakarta.
The party is also in the midst of a rebuilding exercise. Its presidential candidate in 2009, Jusuf Kalla, secured just 12 percent of the vote behind Yudhoyono and Megawati and some voters are wary of its identification with Suharto’s authoritarian era.

Bakrie must also overcome the fallout from an environmental accident in 2006 when a mud volcano erupted near a gas drilling site in east Java, inundating several villages.
The cause of the eruption is disputed with the drilling company, part-owned by the Bakrie Group, blaming an earthquake. Many villagers, however, blame Bakrie. Mud spews to this day and could taint Bakrie’s prospects in a voter-rich region of the country.


Golkar however believes its time has come. It has in recent months assiduously worked to delineate its policies from its coalition partners, aided by a series of corruption scandals within the Democrat Party that have hurt its standing with voters.
“Golkar was born to be in power and to lead .... But it is changing. From a kingmaker, Golkar now wants to be the king. We tried this twice [in 2004 and 2009 elections] and we failed,” said Yorrys Raweyai, a member of Golkar’s central board.
“I am optimistic [that we can be more successful with Bakrie as a candidate] but in a realistic kind of way,” he said.

Born at the finish line’
Although it is trying to distance itself from Suharto’s shadow, Golkar remains staunchly nationalist.
Growing calls from some Golkar politicians for Indonesia to secure more revenue from its abundant resources to sustain its rapid growth and service its growing middle class have left some foreign investors nervous.
Last month, Golkar politicians opposed a bid by Singapore’s DBS Group to take over local lender Bank Danamon, and said they wanted to bar heavy foreign ownership of local banks.
The party was also instrumental in scuppering a government push to reduce subsidies on fuel prices — long called for by economists and rating agencies — after widespread public protests.

For Bakrie himself, there are other issues that could affect a potential candidacy, besides the mud volcano.
The Bakrie Group, though no longer led by the politician, could stand to gain from recent mining policy changes including one under which foreign companies must divest 51 percent within 10 years.
His business decisions have also been questioned. The group has a history of running into debt crises and emerging from them by selling off assets, as well as making acquisitions through debt linked to shares in its firms.

Currently, the group is struggling with a covenant breach on a $437 million loan for which the Bakries had pledged their 23.8 percent in Bumi, one of the world’s largest exporters of thermal coal, as collateral.
But such issues seemed far away during Bakrie’s tour of the Jakarta suburbs of Depok and Tangerang as voters, many struggling on low incomes, were preoccupied with what more the state could do to help them.
“I told him to pay attention to the state of the trains in Jakarta, how the trains often come late, there are lost signals, how the fleet for passengers is too small, how there’s not enough maintenance,” said Syaifudin, an online marketer who was listening to one of his speeches.

For his part, Bakrie confined himself to remarks on leadership and the work ethic, with few references either to the coming political battle or the nation’s policy challenges.
“Never give up and don’t stand in the dark for too long because if you do even your best friend will leave you,” he said in a speech to high school students. “Who is your best friend? Your shadow. Find fresh ideas and get up to work,” he said.

Senior party officials said his strategy during the twice-monthly roadshows around the country is to broaden his appeal as a national leader to voters such as students who can vote in 2014.
They were also testing their own organizational skills: he travelled in a motorcade that stopped traffic and was accompanied by a squad of young workers, all dressed in T-shirts bearing his initials, ARB, and armed with walkie-talkies.
Yet they said the prevailing view of him as a successful member of the elite which gives him credibility as a candidate could also be seen as a weakness.

“Ical was born on the finish line, he has nothing else to fight for. He was rich when he was born,” said Indra Jaya Piliang, head of Golkar’s policy review department, using Bakrie’s diminutive name.
“This [roadshow] campaign will make him say ‘Hi’ to the people at the grassroots. In his office, who dares to debate him?,” he told Reuters.
Still, the approach has its limits. He travelled by train the first day. The next day he arrived in Tangerang in a helicopter.

 

 

 

 

 

 

Forbes wealthiest listing roils Indonesian presidential race
December 5th 2011


The recent publication by Forbes magazine of its annual assessment and ranking of the world’s richest people has added more uncertainty to the already confused prospects for Indonesia’s presidential elections in 2014.
The Forbes listing said that Aburizal Bakrie, head of the family which owns the vast Bakrie Brothers conglomerate and in 2007 judged by the magazine to be Indonesia’s richest man, has fallen to 30th on the list.
Forbes estimates that Bakrie’s business empire has been on a slide for several years and from a value of $5 billion in 2007 it shrank to about $2.1 billion last year; since then it has withered a whopping 57 per cent to a mere $890 million.

The decline of the Bakrie empire, which has involved some highly questionable incidents and decisions, would be of only passing interest except that Aburizal Bakrie is the leader of Indonesia’s Golkar party and its candidate for president in 2014.
Bakrie is among the most high profile and politically experienced of a so far woefully untalented field of candidates aiming to succeed President Susilo Bambang Yudhoyono, who after two terms in office will be barred by the constitution from running again.
Golkar, although tainted by its history as the civilian window dressing for the 30-year military dictatorship of President Suharto who was ousted in 1998, remains a formidable political machine.
But it costs a lot of money to run a presidential campaign in Indonesia, with its population of nearly 240 million people living on more than 13,000 islands and used to a culture in which election goodies are a normal part of the process.
Some political observers in Indonesia reckon it costs close to $1 billion to run a successful campaign, so Bakrie’s losses look to be a significant blow to his prospects.

It was under the Suharto regime when cronyism was king that the Bakrie family made its fortune and built the conglomerate that operates in mining, agriculture, construction and telecommunications.
But even the Bakries’ solid political connections couldn’t insulate them from the 1997-98 Asian economic crisis, though those connections did protect them from defaulting on debts when the government bailed them out.

The company nearly collapsed again in the recession of 2008, by which time Bakrie had resigned the chairmanship (in 2004) to devote himself to politics.
Again officialdom came to the aid of the Bakries, closing the Jakarta stock market for three days to stem the plummeting value of the company’s shares.
There were imprecations of share manipulation around this incident and when the suggestion of another government bailout for the Bakries was voiced, it was shot down by the finance minister, the staunchly upright Sri Mulyani Indrawati.
With no government safety net handy in 2009, the Bakries had to turn to a Chinese sovereign wealth fund for a loan of nearly $2 billion.

Servicing the company’s loans has proved a major problem for Bakrie Brothers.
This has caused a fallingout in the last few days with the British banker, Nathaniel Rothschild, with whom Bakrie Brothers did a deal a year ago to form Bumi Resources for a coal mining venture.

 

 

Family spokesman says debt payments shrink Bakrie’s wealth
The Jakarta Post, Jakarta | Sat, 11/26/2011

Commenting on the result of the latest Forbes research on Indonesia's rich, which places Aburizal Ical Bakrie in 30th position, down few notches from last year's position, family spokesman Lalu Mara Satriawangsa said that Bakrie’s wealth was used to pay debts

 

 


He then cited that among Bakrie's obligations was covering the entire cost of mudflow compensation in Sidoarjo, East Java.
“We pay them anyway even though the company has been declared not guilty by the court in accordance with the Supreme Court’s decision,” Lalu said on Friday as quoted by tribunnews.com.

Lalu said that as of now, Ical was merely listed as a stakeholder and not a businessman because all of Bakrie’s companies have been listed on the Indonesia Stock Exchange.

 

 

Financial woes may trip up Ical’s presidential bid
Saturday, November 26, 2011

Bagus BT Saragih, The Jakarta Post, Bangkok/Jakarta
| Fri, 11/25/2011

Golkar Party chairman Aburizal “Ical” Bakrie may not find it easy to compete in the 2014 presidential elections amid the financial woes which have beset his business empire in the past few years

 

 


Once firmly in the top-tier in the list of richest Indonesians, Forbes magazine put Aburizal in 30th place in its recent 2011 richest Indonesians list, with his wealth estimated to have dwindled by 57 percent from US$2.1 billion last year to $890 million.

Earlier this month, Bakrie and Brothers group sold its 23.8 percent stake in London-listed Bumi Plc. to another coal company, PT Borneo Lumbung Energi & Metal, reportedly to avoid defaulting on its piling debt.
The company had previously announced a plan to carry out a so-called “quasi reorganization” to revalue its debts and assets after the company recorded a deficit of Rp 27.7 trillion ($3.02 billion) between 2008 and 2010 from its business units and partnerships.

Burhanuddin Muhtadi, a political observer with the Indonesian Survey Institute (LSI), said on Thursday that Aburizal’s business woes could significantly affect the electability of both Golkar and Ical in the 2014 elections, given that a run for president needed at least Rp 10 trillion to finance a meaningful campaign nationwide.
“The trillion rupiah loss suffered by Bakrie and Brothers was a massive blow [for Golkar and Ical] in the 2014 general elections but especially for Ical in his presidential bid.”

As the Constitution bars President Susilo Bambang Yudhoyono from running for a third term, Aburizal is seen as one of the strongest contenders in 2014 along with Great Indonesia Movement (Gerindra) Party patron Prabowo Subianto and former finance minister Sri Mul-yani, according to several surveys.
The country’s largest party, the Democratic Party, has yet to officially announce its presidential candidate, even though the names of several potential figures have been circulating, including the President’s in-law and Army Chief of Staff Gen. Pramono Edhie Wibowo. Golkar is also reportedly eying Pramono as Aburizal’s running mate.

Aburizal has been touring several Asian countries to meet with business and political leaders, a move believed to be part of his strategy to fuel his presidential bid.
Aburizal denied that his trips had anything to do with his presidential bid, claiming that it was business as he and Thailand’s leaders had discussed the possibility of Thai investment in the oil and gas sector.

To foreign parties, Aburizal is known as a businessman who often uses his political clout to support his business interests. A 2007 classified diplomatic cable, released by WikiLeaks and published by Reuters, quoted Cameron Hume, a former US ambassador to Indonesia, as saying that “in the mining sector, Cabinet minister Aburizal Bakrie has been most successful in using nationalism for his private personal gain”.

Aburizal, who resigned from the Bakrie and Brothers group in 2004 when he became Coordinating Minister of People’s Welfare in Yudhoyono’s administration, declined to comment on the selling of Bakrie and Brothers’ stake in Bumi. “I don’t deal with business matters anymore,” he said.
Although Aburizal has distanced himself from Bakrie and Brothers, Burhanuddin argues that Aburizal’s claims might be rhetorical. “The businesses of Bakrie and Brothers are highly dependent on politics. Even if Ical is not directly involved in day-to-day operations, there is no doubt that Ical is an important political factor for the Bakrie and Brothers group,” Burhanuddin said. (sat)

 

 

 

Aburizal Bakrie to Run for President in 2014: Agung
October 26, 2011

Aburizal Bakrie will run for president in 2014, Golkar Party deputy chairman Agung Laksono says.
Speaking on Tuesday evening, Laksono, the coordinating minister for people’s welfare, said an official announcement would be made during the party’s three-day national leadership meeting that begins today.

“Even though Aburizal refuses to discuss [the election] now, regional headquarters have strongly urged us to do so,” Agung said at the Vice Presidential Palace. “I can’t be sure how or when the discussion is going to take place but it is confirmed that Pak Ical [Aburizal] is Golkar’s presidential candidate.”

With President Susilo Bambang Yudhoyono prevented by law from contesting a third term in office, Aburizal’s wealth and the as-yet lack of any strong rivals, put him in a strong position to become Indonesia’s next president.
The controversial businessman and chairman of Golkar, however, remains a polarizing figure and will struggle to overcome serious question marks about his character.
Agung urged party officials to make the official announcement as soon as possible.
Yudhoyono is expected to open the Golkar conference this evening.

Antara/JG

 

 


AGO set to act against Bakrie Group over tax fraud case

Bagus BT Saragih, The Jakarta Post, Jakarta | Wed, 09/29/2010

Acting Attorney General Darmono said Wednesday state prosecutors are studying testimonies revealed in court on alleged involvement of Bakrie Group companies in major tax fraud cases.
"I have given an order to Junior Attorney General on Special Crimes to follow up and study the testimonies, including those that named [Bakrie companies]," Darmono said after a hearing at the House of Representatives.

He was referring to the testimonies of former junior tax officer Gayus Halomoan Tambunan, a key player in an alleged legal mafia and tax mafia.
Darmono said the AGO was not afraid of investigating the cases, despite the fact that the companies are linked to Golkar Party chairman Aburizal Bakrie.

During a trial at the South Jakarta District Court on Tuesday, Gayus admitted to receiving U$3 million (Rp 28 billion) from three mining companies controlled by Aburizal's family.
According to Gayus, the three firms, PT Kaltim Prima Coal, PT Arutmin and PT Bumi Resources, gave him the money to illegally adjust their tax obligations. All the companies have denied Gayus’ claim.

 

 

 

 


Surveys Name Three Presidential Candidates

"Megawati, Prabowo, and Aburizal are the three strongest candidates"

27 Oktober 2011

 

 

27 Oktober 2011

"Megawati, Prabowo, and Aburizal
are the three strongest candidates,"
said Widdi Aswindi, JSI Executive Director.

 

 

VIVAnews - Three research institutes have released surveys on the electability of party and presidential candidates.
All three revealed a number of figures who are considered the most popular to participate in the 2014 general elections.

Reform Institute, which conducted the survey between September 12 to 24, 2011, found that if Susilo Bambang Yudhoyono and Megawati Sukarnoputri are excluded, General Chairman of Golkar Party Aburizal Bakrie tops the list with 13.58 percent of votes. Prabowo Subianto follows with 8.46 percent, Jusuf Kalla 7.06 percent, Hidayat Nurwahid 5.17 percent, and Ani Yudhoyono 4.13 percent.

Soegeng Sarjadi Syndicate (SSS) which held the surveys on October 3-8, 2011, stated, if Yudhoyono and Megawati are not involved, Prabowo would garner most of the votes, by 28 percent of the respondents. Coming next are Mahfud MD with 10.6 percent, Sri Mulyani Indrawati 7.4 percent, Aburizal Bakrie 6.8 percent, KH Said Aqil Siradj 6 percent, Din Syamsuddin 5.2 percent, Pramono Edhie Wibowo 4.2 percent, Jusuf Kalla 4.0 percent and a dozen other names pocketing below 4 percent.

SSS also conducted a special survey on vice presidential candidates. Mahfud MD is the figure for whom respondents would vote, amounting to 15.6 percent. After him are Sri Mulyani with 8 percent, Pramono Edhie Wibowo 7.1 percent, Din Syamsuddin 6.8 percent, Said Aqil Siradj and Djoko Suyanto each 3.9 percent, and Puan Maharani 3 percent.

A different name list was resulted by Indonesia Vote Network (JSI), which surveyed on October 10 to 15, 2011. Being included in this survey, Megawati was selected as a presidential candidate with the highest support, which is 19.6 percent. Other presidential candidates whom the general public prefer after Megawati are, successively, Prabowo Subianto (10.8 percent), Aburizal Bakrie (8.9 percent), Wiranto (7.3 percent), Sri Sultan Hamengkubuwono X (6.5 percent) , Hidayat Nur Wahid (3.8 percent), Surya Paloh (2.3 percent), Sri Mulyani (2 percent), Ani Yudhoyono (1.6 percent), Hatta Rajasa (1.6 percent), Anas Urbaningrum (1, 5 percent), Sutanto (0.2 percent), and Djoko Suyanto (0.2 percent).

"Megawati, Prabowo, and Aburizal are the three strongest candidates," said Widdi Aswindi, JSI Executive Director.
• VIVAnews

 

 

Indonesian tycoon Aburizal Bakrie to run for president

Published on Sep 12, 2011

JAKARTA (AFP) - Indonesia's second-largest political party Golkar on Monday picked tycoon and power-broker Aburizal Bakrie as its presidential candidate for elections in 2014, it said.

Mr Bakrie and his entrepreneurial family are collectively worth billions and run businesses in Indonesia selling everything
from telecommunications to coal to education.
But the Bakries and their companies are mired in allegations of corruption and tax fraud. A Bakrie family spokesman has denied any wrongdoing, saying such allegations are 'baseless and untrue'.

Mr Bakrie is currently the chairman of Golkar and was chosen as its representative for the next polls at a party board meeting in Denpasar on the island of Bali, officials said.

 

 

I

Insight: Borneo mines lure Rothschild into the wild

JAKARTA/LONDON (Reuters)- It was supposed to be a union of two legendary business dynasties, one West, one East. Nathaniel Philip Rothshild, the 40-year-old scion of the storied European banking family, forged a deal a year ago with the Bakrie brothers, one of Indonesia's mightiest business families, to create an international coal-mining titan.

 

 

That deal last November seemed incredible from the start; the dream of creating the world's biggest thermal coal company, with mines in Indonesian Borneo, and aiming to be one of the biggest listed companies on the London exchange. Now a year later the partnership could be on the brink of collapse.
This week Rothschild called for a "radical cleaning up" of the balance sheet and corporate culture at the Bakrie brothers chronically indebted flagship, PT Bumi Resources, his partner in the London-listed coal venture, Bumi Plc.
In a letter written to Ari Hudaya, Chief Executive of both Bumi Plc and Jakarta-listed PT Bumi Resources, Rothschild said the partnership's goal of entering the FTSE-100 in 2012 was still attainable. But he was not satisfied with progress so far with his Indonesian partners, who remain "over-leveraged," which was a major factor in the "corporate governance discount" on the Jakarta's firm's stock price.

The leaked letter was a stunning rebuke to top Bakrie lieutenant Ari Hudaya. Hudaya's dual role as CEO of both the Bakries' PT Bumi Resources and the Bumi Plc joint venture required "closer evaluation and scrutiny," Rothschild wrote in the letter, published on the Financial Times website.
Rothschild knew he was dealing with one of Southeast Asia's most powerful and controversial families, and one with chronic debt issues. Over the past two decades, he has flirted with risk and emerging market powerbrokers, ranging from an oil venture in Iraqi Kurdistan to a friendship with Muammar Gaddafi's son Saif al-Islam, who has been trying to flee Libya after the death of his father.

In the process, Rothschild has shed the party-hard reputation of his university years -- the Sunday Times Rich List anointed him Britain's richest hedge fund manager and he is estimated to be worth around a billion pounds. He has emerged as a serious dealmaker with a contacts book to rival that of his father, Baron Rothschild, and spends the equivalent of around a month each year in his private jet "N4T."
On the Indonesian side, Aburizal Bakrie, the oldest of the brothers, headed the group until 2004, when he joined President Susilo Bambang Yudhoyono's administration. He left after repeatedly clashing with reformers in Yudhoyono's government and now heads Indonesia's biggest political party, Golkar. He is a likely presidential candidate in the 2014 Indonesian elections.

The strain in relations between the future Baron Rothschild and a family that may boast a future president after their hopeful beginning a year ago illustrates some of the difficulties in doing business in Indonesia.
Southeast Asia's largest economy is brimming with opportunities, though it does means navigating through opaque regulations, erratic business relationships, changing policies and deeply entrenched corruption. The World Bank ranks it 129 out of 183 countries in ease of doing business.


GLOBAL MARKET SELL-OFF
For the Bakries, the allure of the deal with Rothschild was to get that prized listing on the London exchange. As Rothschild noted in his letter, their shares on the Jakarta exchange have underperformed, despite the attractiveness of the coal assets.
Rothschilds' company Vallar became Bumi Plc and was relisted on the London Stock Exchange in June -- just ahead of a global market sell-off. The stock dropped steadily from the start as markets fell, until it hit 8.50 pounds. That price triggered a margin call from Bakrie lenders who demanded repayment on loans worth $1.3 billion.

The Bakries brought in a new investor at the end of October to fix that problem, Indonesian coal miner and investment banker Samin Tan. They sold half their original 47 percent stake in Bumi Plc to Tan in a complex deal that featured special purpose share-holding vehicles.
The deal did not dilute Rothschild's 10 percent stake in Bumi Plc, and Rothschild in his letter said he fully supports Tan's entrance into the partnership. What he objected to, Rothschild said, was that Hudaya had refused to call in Bumi Resources' own loans to others to repay debt. Bumi Plc owns a 29 per cent stake in PT Bumi Resources, which in turn controls the lucrative mines.
Chris Fong, a spokesman for the Bakrie family, told Reuters Rothschild's letter had taken them by surprise.
"Nat Rothschild hasn't addressed these issues with us," Fong said, referring to a passage in the letter in which Rothschild said the Bakries also wanted a transformation in the management of Bumi Resources.
"If he wants to raise any issues, as a shareholder and board member, we would expect him to follow accepted corporate governance procedures and raise concerns at the board level and at the appropriate time."
The two sides, according to knowledgeable sources in both camps, had been taking each other by surprise of late.

Rothschild, thousands of miles away in Europe, had called the Bakries after Reuters first broke news in late October of an impending deal with Tan, but he could get no confirmation of the deal.
"The family left Rothschild in the dark until the news that Samin Tan was nearing a deal and he called the family about it," said a source close to the Bakries with direct knowledge of the situation. "The group didn't think he needed to know about this, that he should only know when a deal was done."
Eton-educated Rothschild insisted in an interview last month with Reuters that he had no issue with the Bakries, and that he had "total confidence" in the family.
The latest turns in the Bakries' fortunes seems to be following a script written three years ago during the 2008 global financial crisis. They fended off a $1.2 billion margin call then by selling stakes in group firms, many of them with buy-back clauses, to lenders and investors.
Like then, the Bakries' latest debt refinancing also ensured the prized Borneo mines would remain in Indonesian hands.

LEGACY OF DISTRUST
Indonesia has some of the world's largest deposits of coal, gold, copper, tin and natural gas, spread across the archipelago of 17,000 islands. The legacy of harsh colonialism by the Dutch for over three hundred years has left many Indonesians with a distrust of foreign motives.
The Borneo coal mines at the heart of the deal with Rothschild once belonged to global energy companies Rio Tinto, BP and BHP Billiton, who sold them to the Bakries in 2001 and 2003, after coming under pressure from resource nationalists to divest their assets to local interests.

"Our contacts at the time told us these deals undervalued the companies at pennies on the dollar," said the U.S. Ambassador to Indonesia, Cameron Hume, in a November 2007 classified diplomatic cable released by Wikileaks. Bakrie group executives, Hume added, have said they hoped to do more of these "value-oriented acquisitions."
"In the mining sector, cabinet minister Aburizal Bakrie has been most successful in using nationalism for his private personal gain," Hume noted in that cable.

Aburizal Bakrie's Golkar party at the time was making resource nationalism an issue in the run-up to the 2009 presidential election, threatening to review energy contracts with foreign oil companies.
So it caused ripples of surprise and interest when Nirwan Bakrie celebrated his 59th birthday last year by announcing that the coal assets held by PT Bumi Resources would be injected into Rothschild's London-listed investment vehicle Vallar.

Rothschild put up 100 million pounds of his own money, but the new company's biggest asset would seem to be worth the price. The KPC mines in East Kalimantan province in Indonesia's part of Borneo island are among the world's largest open pit mines, with 4.5 billion tonnes of proven reserves. Bumi Plc expects coal sales this year of 77 million tonnes, which would make it the world's largest thermal coal exporter.
"What we are creating here is the largest exporter of thermal coal to China," Rothschild, whose ancestors advised generations of European royalty and helped to bankroll Britain's war against Napoleonic France, declared at the time.
For Rothschild, the venture was an opportunity to become a key player in the global coal industry, and to cement his image as a buccaneering financier in the mold of his 19th Century forbears.

For the Bakrie family, who escaped financial collapse twice before in 1998 and 2008, the London listing gave it instant credibility and a global profile.
"We needed the London listing to establish a presence in the international capital market ... we wanted to show the world that Indonesia owns a global champion in coal," Nirwan Bakrie told Reuters in Jakarta last month.

SEEDS OF MISTRUST
But not long after that hopeful beginning, seeds of mistrust were sown. In March, three months before Bumi Plc's London listing, the Bakrie group's holding company, Bakrie & Brothers, along with affiliated firm Long Haul, consolidated some of their debt through a $1.35 billion loan arranged by Credit Suisse and backed by their stake in Bumi Plc.

Rothschild and his advisors asked for the details at the time but were told those were private and had no relevance to their joint venture in Bumi Plc, sources close to the Bakrie family said.
By early October, Bumi Plc's falling share price triggered the margin call on that loan, plunging the Bakries into a new debt crisis and ultimately leading to the Tan deal.
According to several sources close to Bakrie family, the Bakries believed Rothschild was ready to buy their now cheapened stake in Bumi Plc if the group was pushed into default.
"He already was looking for a new local partner to replace the Bakries here ... but the coal mining world is small in Indonesia and those local partners declined to do a deal with him," one source said. "I think this guy is not a good partner."

The Rothschild camp denies those claims.
With the mistrust apparently deepening, Ari Hudaya, the CEO of Bumi Resources and Bumi Plc and the target of Rothschild's disgruntlement in his letter, called Rothschild on October 17 on his Blackberry.
He had just met with the Bumi Resources board inside the Bakrie Tower in Jakarta's financial district, whose dark tinted windows afford views of a volcano outside the capital. They had decided to cancel a $2 billion deal announced in June that would have given Bumi Plc 75 percent of Bumi Resources Minerals (BRM), the Bakries' latest mining exploration venture, with promising assets from copper and zinc in the jungles of Indonesia to African diamonds.
Bumi Plc said later in a regulatory announcement from London the deal was canceled due to "continuing market uncertainties," which was affecting the share prices of the companies involved.

The decision left Rothschild with a less diversified mining firm, and closing off what seemed an easy and promising entrance to new mining frontiers.

FRIEND OF BAKRIES
The Bakries had first tried to do a loan deal with Glencore, Reuters reported last month. The commodity trading giant was keen to get a tighter grip on their Indonesian coal marketing rights and keep out rival trader Vitol.
But because lenders wanted the deal to involve an equity stake, the Bakries turned to Tan, who controls Borneo Lumbung Energi and investment bank PT Renaissance Capital. The two sides were no strangers, since Tan had advised the Bakries on their 2003 mine purchases and then tried to buy Bumi's key mines himself in a failed deal several years ago.

Like the Bakries, Tan comes from Sumatra, born into a family of fish traders. He was a partner at accountancy firm Deloitte, before setting up his own investment firm.
"The deal is not only about Bakrie," Tan told Reuters, when asked about the risk of any deal with the Bakries, adding he had prepared some "safety measurement."
Investors were not impressed, given that Tan is financing it with a loan from Standard Chartered that boosts his Borneo Lumbung Energi's debt profile. The firm's stock crashed as much as 17 percent on the day of the deal, and several banks have since downgraded their investment ratings on the miner, from "buy" to "hold" or "reduce."

Investment banks have said it shouldn't not hurt Bumi Plc, and the London stock has steadied this month along with the rest of the market.
Weeks before his scathing letter to his Indonesian partner, Rothschild had told Reuters he was confident he would continue to have a relationship with the Bakries for a long time to come.
"In 10 years' time, I expect to still have the same type of strong and trusting relationship that I have with the Bakries today."

(Saeed Azhar reported from SINGAPORE; Additional reporting by Prakash Chakravarti in HONG KONG and Jackie Cowhig in LONDON; Writing by Neil Chatterjee; Editing by Bill Tarrant)

 

 

Bailing Out Indonesia's Bakrie: Commodity Brokers To The Rescue?
Wall Street 10/14/2011

Commodity markets have been kind to Indonesia with its abundant reserves of coal, copper, palm oil and gold.
However, one of its largest corporate players, the Bakrie family, a major coal exporter, is in crisis talks to resolve a debt crunch.
The result could see Glencore and Vitol, two global powerhouses in commodities, take a piece of Bakries’ valuable coal business. Both Reuters and the Financial Times cite sources close to the negotiations that suggest a convertible loan of
up to $900 million is in the works.
The collateral for such a loan could include Bakrie’s 47% stake in Bumi plc, the UK-listed vehicle that pulled off a complex $3 billion deal with Bakrie last year that amounted to a reverse listing for the family’s main coal asset. That stake was pledged as collateral for a $1.3 billion loan arranged by Credit Suisse that is in peril due to falling stock prices in London
and Jakarta. Now Bakrie is seeking to refinance this loan and may have to give up equity to get what it wants.

As usual with Bakrie, the story is one of over-leveraging, opaque finances and political controversy.
The family, headed by patriarch Aburizal Bakrie, a presidential contender for 2014, has ran into trouble before.
Its most recent debt crunch came in 2008 when its companies were suspended from the Jakarta exchange pending a
rescue plan. Bakrie was said to be seeking a public bailout for its Bumi Resources via a state-owned coal company.
A Forbes Asia cover story on Aburizal Bakrie, who was still a cabinet minister at the time, was entitled Bye-Bye Bakrie?
Yet his companies came back to life, thanks to a restructuring that included a $1.9 billion loan from a Chinese sovereign wealth fund. A reformist finance minister who had opposed a bailout for Bakrie was ousted from the cabinet.
Another strike to Bakrie.

Then came the 2010 Bumi deal led by Nat Rothschild, seemingly a way for global investors to share in Bakrie’s commodity riches under a more reputable governance structure. Or at least that was the pitch.
Meanwhile, Bakrie was clearly anxious to raise money for its other Indonesian ventures, which range from property to palm oil and telecoms. So it went to the market to borrow, using its stake in the London entity as collateral. Cue falling stock prices, crisis talks and another round of restructuring.
This time it seems to be commodity brokers, not bankers, that are riding to the rescue. Presumably they’re interested in getting access to the coal and other resources and this offers a cheap entry point. Just another chapter in the Bakrie saga.

 

 

Maligned at Home, Bakrie Group Is the Face of Indonesia Inc. Around the World
February 18, 2011

At a lecture by a European leader in Singapore several years ago, a Western member of the audience expressed almost devout anguish over China’s economic clout in world affairs given its problems with democracy and human rights at home.

The statesman asked the young man what he did for a living. The man replied that he worked in a company. The statesman asked: “And is your company run on biblical principles?” As laughter rippled through the audience, the statesman looked at the hapless questioner intently and then softened his voice.

He had no doubt that the man ran his family on biblical principles, but business was another matter. Just as the two could be kept separate, it was perfectly legitimate to have concerns over China’s political and social policies, but those concerns did not justify existential alarm over its role in world affairs.

I was not present at the lecture, but heard this anecdote from a friend. I was reminded about it during the predictable aftermath of the Bakrie Group joining forces with Rothschild in November to consolidate its influence in Indonesia’s coal sector. Here was an Indonesian company that had struck a world-class deal to advance the interests of its country, the world’s largest exporter of thermal coal.
Yet some responses to the deal were hardly joyous. “Coal is so popular that it makes for odd bedfellows,” The Economist declared with wry disdain.

Since company patriarch Aburizal Bakrie “is not universally loved in his homeland,” Nat Rothschild “should prepare for a bumpy mix of politics and business,” it added. Where Rothschild is concerned, that piece of advice is gratuitous, if not presumptuous: The banking dynasty did not become a dynasty without understanding the business of politics.
But it is the Bakrie Group which is the real target of the barb. Many commentators, both in Indonesia and abroad, have developed a professional interest in worrying about its continued ascendancy given the controversies that surround it.
Holding the company up to the highest principles, they wonder righteously whether its prominence might not be dangerous for Indonesia — when the truth is that no company that operates profitably on earth would be willing to have its bottom line judged by such exacting principles.

Admittedly, the Bakrie Group is no stranger to controversy, ranging from tax-evasion charges, which it denies, to its contested responsibility for a disastrous mud volcano in 2006.
However, what gives its detractors their heavy ammunition is that Aburizal is also chairman of Golkar, the ruling party during President Suharto’s regime that is now a member of President Susilo Bambang Yudhoyono’s governing coalition.

Aburizal has been accused of using his political connections to advance his business interests, in a coded reference to the persisting culture of the Suharto years, when the company flourished because of the state patronage with which the Indonesian strongman buttressed his rule.
The critics have a point, but the point is neither here nor there.

The Bakries thrived under the patronage system, but they were not the only corporate entity to do so. No business of any note succeeded in that system or era unless it played by the rules. What is important is that the group continued to flourish after Suharto, overcoming market setbacks in the vastly different environment of the maturing democracy that Indonesia is today.
The Bakrie Group is a national enterprise. From its origins in Sumatra in 1942, when Achmad Bakrie — Aburizal’s father — set up a little trading house that dealt in coffee, rubber and pepper, the group’s trajectory has run parallel to Indonesia’s own evolution from a poor agricultural country to a regional economic power.
The conglomerate today combines its expertise in agriculture with extensive interests in real estate, trade, shipping, banking, insurance, media, manufacturing, construction and mining.

The fact that it is a pribumi — indigenously owned — company symbolizes the reach of native business skills that, having crawled out of colonial rule, have taken the highway to modernization and now globalization.
It is because of this success that the Bakries have become a national enterprise, and not the other way around. Thus, when Indonesia has come to the group’s rescue, it has done no more than what other states have done for their own national enterprises, including in advanced democracies.

American protection for Chevron in the face of the Chinese takeover plan is a case in point. Some national enterprises are simply too big to fail.
That is the business of politics. To pretend otherwise is to live in an imaginary world.
As the group looks ahead, it is becoming a bridge for Indonesia to a globalizing world.

China, which leads the pack in chasing the future, acknowledged the Bakries’ worth when it signed a $1.9 billion loan agreement with Bumi Resources using its sovereign wealth fund, the China Investment Corporation, in October 2009.
In Indonesia, the Bakries represent the cutting edge of business. Products developed and manufactured by Bakrie & Brothers, the holding firm for the group, are an essential component of infrastructure and telecommunications systems in Australia, Brunei, Canada, China, Dubai, England, Egypt, France, Germany, Iran, Italy, Japan, Kuwait, Malaysia, Mexico, the Netherlands, the Philippines, Singapore, the United States, Uzbekistan and Vietnam.

The group is to Indonesia what companies like Tata and Reliance are to India: the interface between a locally grown company that is a national asset, and the globalizing business environment in which nations are obliged to operate.
Such companies think locally but act globally, with calm, confidence and elan. In a rising Asia, they are signposts to the future.

Derwin Pereira heads Pereira International, a Singapore-based consulting firm.
He can be reached at derwin.pereira@pereiraintl.com. This article first appeared in the Business Times.

 

 


AGO set to act against Bakrie Group over tax fraud case

Bagus BT Saragih, The Jakarta Post, Jakarta | Wed, 09/29/2010

Acting Attorney General Darmono said Wednesday state prosecutors are studying testimonies revealed in court on alleged involvement of Bakrie Group companies in major tax fraud cases.
"I have given an order to Junior Attorney General on Special Crimes to follow up and study the testimonies, including those that named [Bakrie companies]," Darmono said after a hearing at the House of Representatives.

He was referring to the testimonies of former junior tax officer Gayus Halomoan Tambunan, a key player in an alleged legal mafia and tax mafia.
Darmono said the AGO was not afraid of investigating the cases, despite the fact that the companies are linked to Golkar Party chairman Aburizal Bakrie.

During a trial at the South Jakarta District Court on Tuesday, Gayus admitted to receiving U$3 million (Rp 28 billion) from three mining companies controlled by Aburizal's family.
According to Gayus, the three firms, PT Kaltim Prima Coal, PT Arutmin and PT Bumi Resources, gave him the money to illegally adjust their tax obligations. All the companies have denied Gayus’ claim.

 

Indonesian Stock Market
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Corruption Watchdog Presents Findings on Bakrie Tax Evasion
in BEI Index,IDX,Indonesia Shares,Indonesia Stock Market

 

The leading Indonesian graft watchdog, Indonesia Corruption Watch has presented its own version of tax evasion evidence by the mining arms of the politically connected Bakrie & Brothers group, which tops US$620 million or almost three-fold totaled by the taxation office.

The group reported their findings to the Taxation Directorate General under the Finance Department on Monday which compiled tax violations by PT Bumi Resources Tbk and two of its subsidiaries PT Kaltim Prima Coal and PT Arutmin Indonesia from 2003 – 2008.

Firdaus Ilyas Coordinator of the Budget Monitoring and Analysis Division said the group findings was not much different from those announced by the taxation office at Rp2.1 trillion (US$224.71) but the amount resulted only from tax violations in 2007. “We found more incorrect reporting, even occurred in 2008.”

 

 

 

Bakrie’s Tax Troubles: the Kaltim Prima Coal Case
Wednesday, October 27, 2010

Director General of Tax v. PT. Kaltim Prima Coal, Supreme Court Case Review Decision No. 141 B/PK/PJK/2010 (24 May 2010).

 

 

Background
The disputes between the Bakrie Group and the Ministry of Finance over a range of tax issues have been well covered in the press recently. The political aspects of such disputes have also been alluded to, with some of the political attacks on former Minister of Finance Sri Mulyani arguably stemming from her ministry’s pursuit of Bakrie’s business interests over unpaid taxes. Such disputes are further complicated by Bakrie’s prominent position as the Chairman of the ruling Golkar party, changes at the Ministry of Finance that saw the departure of Sri Mulyani to take up a position as Managing Director at the World Bank in Washington, and the subsequent assumption of her former position as Minister of Finance by Agus Martowardojo.

Bakrie’s tax issues appear to have come to a fore with the PT Kaltim Prima Coal (KPC) case, which stems from a rather blatant transfer-pricing scheme that saw the shifting of profits from Indonesia to the Cayman Islands. Such schemes involve the pricing and sale of a good or service - at below market price - by an Indonesian company to an affiliated tax-haven company, with the subsequent resale - typically at market price - to the ultimate buyer. This type of sale ensures that profits are obtained within a low tax jurisdiction, in order to evade the full taxation of profits in Indonesia.

Indonesian legislation attempts to address such practices via Article 18 (3) of Law No. 36 of 2008 on Income Tax and Article 2 (1) of Law No. 8 of 1983, as amended by Law No. 18 of 2000, on Value Added Tax.These provisions allow the Director General of Tax to reallocate income and to adjust prices, respectively, when transactions between companies with a special relationship are conducted below the market price.
Judicial History

The KPC saga began with an attempt by KPC to claim back a portion of the taxes that it paid in 2007. Upon KPC’s submission of its annual tax return (Surat Pemberitahuan) in March 2008 with a request to receive a tax refund for a portion of its payment of IDR 30 million, the Director General of Tax conducted an assessment (Statement Letter on Assessment No. PRIN-069/WPJ.19/KP.01/2008, dated 9 May 2008), as is routine, to evaluate the basis of KPC’s claims. Based on the assessment the Director General of Tax concluded that, rather than an excess payment, there was a shortfall in 2007. Following this the Director General of Tax requested that KPC revise its annual tax return for 2007, KPC, however, failed to fulfil this request. This led the Director General of Tax to conduct a second assessment (Statement Letter on Assessment of Initiation Evidence No. PRIN-001/WPJ.19/BD.03/2009, dated 4 March 2009), on the lack of payment by KPC.

The Director General’s second assessment concluded that there was indication of criminal activity in the form of the sale price of coal being manipulated by KPC in 2007. The price manipulation took the form of a scheme where coal, instead of being sold directly to the intended buyers, was sold by KPC to PT. Indocoal Resource Limited, both being subsidiaries of PT. Bumi Resources Tbk (and ultimately owned by the Bakrie Group). The crux of the scheme being that the coal was sold to PT. Indocoal Resource Limited, a Cayman Islands based company, at half the price that was then charged by Indocoal to the ultimate buyers. This allowed KPC to evade paying a substantial amount of tax, by shifting its profits to the Cayman Islands tax haven.

Further strengthening the indication of criminal activity was the fact that Indocoal’s invoices were produced by KPC, and that both companys’ coal revenues were held in a single bank account. It was predicted that the estimated tax payment shortfall would reach IDR 1.5 trillion.
Following the commencement of the second assessment, KPC sought to challenge the validity of the assessment based on a claim that two assessments could not be conducted simultaneously. KPC brought the challenge by means of a lawsuit at the Tax Court, in accordance with Article 23 (2) of Law No. 6 of 1983, as amended by Law No. 16 of 2000, on General Provisions and Tax Procedures.

In its 8 December 2009 Decision (Tax Court Decision No. Put. 20966/ PP/M.IX/99/2009), the Tax Court stated that pursuant to Minister of Finance Regulation No. 199/PMK.03/2007 and Director General of Tax Circular Letter No. SE-01/PJ.7/2003, as amended by Circular Letter No. SE-04/PJ.07/2005, if an Assessment of Initiation Evidence (the second assessment) is to be carried out, the first assessment has to be stopped by means of a report being issued. Accordingly, the Tax Court felt that the existence of two Statement Letters on Assessment regarding the same taxation period and issue, without an adequate explanation from the Director General of Tax, created a negative public image. Based on this, the Tax Court ordered the Director General of Tax to annul the Statement Letter on Assessment of Initiation Evidence, due to its procedural non-compliance.

The Supreme Court Decision
The Director General of Tax appealed to the Supreme Court, bringing a case review (PK) petition to challenge the decision of the Tax Court. In summary, the Director General of Tax claimed that:

1. The Tax Court did not have jurisdiction to review the second assessment, since it was not a final decision, and as such was not subject to review by the Tax Court;
2. The Tax Court made a procedural error in commencing the adjudication of the case prior to KPC submitting its statement of claim;
3. That the Statement Letter on Assessment of Initiation Evidence is not a type of document that can be subject to a lawsuit at the Tax Court;
4. That KPC have made an error in citing the number of the Statement Letter on Assessment being opposed (using ‘Print-’ instead of ‘PRIN-’); and
5. That prior to the commencement of the second assessment (6 March 2009), based on the issuance of the Statement Letter on Assessment of Initiation Evidence (dated 4 March 2009), the first assessment was in fact terminated (5 March 2009). And that, therefore, KPC was not subject to two assessments at the same time.

While the Supreme Court rejected all of the claims, the following reasons for the rejection of claims 3 and 5 are of particular interest:
3 Concerning the type of Statement Letter on Assessment that can be challenged through a lawsuit at the Tax Court: this was rejected based on Article 31 (1) of Law No. 14 of 2002 on the Tax Court, which states that a lawsuit can be brought to challenge “... other Statement Letter[s] as stipulated under Article 23 (2) of Law No. 6 of 1983, as amended by Law No. 28 of 2007, on General Provisions and Tax Procedures.” With Article 23 (2) (c) including “Statement Letters in relation to taxation decrees, other than what is stipulated under Articles 25 (1) and 25,” and the Statement Letter on Assessment of Initiation Evidence being one of such Statement Letters.

5 Regarding the procedure of the issuance of the Statement Letter on Assessment of Initiation Evidence: this was rejected based on the consideration of: i) Director General of Tax Circular Letter No. SE-01/PJ.7/2003, dated 1 April 2003, on Tax Assessment Policy, as amended by Director General of Tax Circular Letter No. SE-04/PJ.07/2005, dated 29 April 2005, on Initiation Evidence Assessment Policy; and ii) Minister of Finance Regulation No. 199/PMK.03/2007 dated 28 December 2007, on Tax Assessment Procedure.

The Director General of Tax Circular Letters, in Section VII (2), state that if an initial assessment is expanded into a secondary Initiation Evidence assessment then the initial assessment has to be stopped via the issuance of a Report on Tax Assessment (Laporan Pemeriksaan Pajak Sumir or LPPS). And the Minister of Finance Regulation, in Article 27 (3), requires a Report on the Results of an Assessment (Laporan Hasil Pemeriksaan Sumir) to be issued to stop the initial assessment.
The rejection was based on the Statement Letter on Assessment of Initiation Evidence being issued (4 March 2009) prior to the initial assessment being terminated (5 March 2009) by means of LPPS No. LAP-036/WPJ.19/KP.01/2009. As such, since its issuance was not conducted in accordance with the prevailing procedures, the Statement Letter on Assessment of Initiation Evidence was annulled by the Supreme Court.

Consequentially, the Supreme Court rejected the case review petition. However, the Supreme Court did state that the Director General of Tax can continue the assessment by re-issuing the Statement Letter on Assessment of Initiation Evidence that is in accordance with the prevailing procedures.
Finally, the Supreme Court ordered the Director General of Tax to pay KPC’s legal costs in the nominal amount of IDR 2.5 million.

Conclusion
Given the extensive indications of criminal tax evasion by PT. Kaltim Prima Coal, the expectation of many prior to the court decisions was that the Director General of Tax would prevail in the KPC case. Nonetheless, both the Tax Court and the Supreme Court sided with PT. Kaltim Prima Coal. The Director General of Tax indeed has a poor record of litigating tax cases. This is a pertinent problem that calls for urgent action, especially considering the substantial amount of public funds that are lost to private interests.

Worse still, if the recent claims of Gayus Tambunan, a former junior tax official who amassed over USD 10 million through bribes, are to be taken at face value, it appears that the effectiveness of the Indonesian tax authorities is being severely undermined from within.

There is certainly merit, at least in the context of separation of powers, in the objective and non-preferential treatment of the Director General of Tax by the courts, who, as a representative of the State, nonetheless has a far from perfect litigation record. On the other hand the courts’ decisions seem to provide tacit acceptance of the criminal actions of individuals like former tax official Gayus Tambunan.
Essentially, the KPC case review only deals with the procedural error of issuing the Statement Letter on Assessment of Initiation Evidence. Such errors could be corrected, in accordance with the procedures, as set out in the relevant regulations, and the assessment could be resumed. The ultimate outcome of the KPC case, and others like it, will ultimately turn on the effectiveness of the Director General of Tax in pursuing tax evasion schemes.

Filipp Levin

 

 

Bakrie for President?
Written by Our Correspondent
Tuesday, 30 November 2010

Indonesia's notorious businessman appears to be the front-runner

The mid-November announcement that banking scion Nathaniel Rothschild had acquired 25 percent of Bumi Resources, controlled by Aburizal Bakrie, has largely been met with astonishment by those familiar with the operations of Indonesia's most famous and notorious businessman.

 

 

That is because what Bakrie has done to minority shareholders over the last couple of decades is the stuff of legend. The Bakrie family empire has nearly capsized twice since the 1997-1998 Asian Financial Crisis, the first time bobbing back to the surface only because a thoroughly corrupt Indonesian government bailed Bakrie out. The second time, amid allegations of massive share manipulation, Bakrie shares fell by 30 percent and resulted in the closure for three days of the Indonesian Stock Exchange at the onset of the global credit crisis. That later resulted in a months-long campaign by furious bankers and shareholders to get their money back after the then-Finance Minister Sri Mulyani Indrawati blocked another round of bailouts.

Rothschild — a member of one of the world's most respected banking families, and one of te world's most cautious — now has put US$3 billion into Indonesia, metamorphosing Vallar Plc, a mining investment vehicle, into what amounts to an Indonesian coal venture. In addition to the US$1.43 billion to Bakrie, he put another US$1.57 billion in cash and new shares into Berau Coal and Energy, controlled by Indonesia's Roeslani family. Vallar's shareholders retain only a minority stake in the company.

Southeast Asia has not been kind to minority shareholders. They have regularly taken a fearful beating in Malaysia, Indonesia, Thailand and the Philippines among others. But Bakrie is arguably at the very top of the Asia minority-thumping pantheon. Even the docile Indonesian Stock Exchange, however reluctantly, gave three Bakrie companies a Rp500 million (US$55,550) slap on the wrist for misstating cash reserves. After the shares fell off the cliff in the wake of the global financial crisis, they suddenly caught fire again in May of 2009, with the shares of seven family company stocks tripling in value on average, causing the exchange to suspend trading in some companies because of suspicions they were being manipulated.

So the question has to be asked: did Rothschild know what he was getting into? Several news sources have pointed out that from beginning to end, the transactions only took a few weeks to conclude.

But some market-watchers might not be taking into account Aburizal Bakrie's growing clout. He is hoping to become the country's next president when elections are held in 2014 and improbably appears to be the front-runner – a far cry from July 2009, when the Golkar Party, which he now heads, was drubbed in national elections by what appeared to be a reform movement headed by reelected President Susilo Bambang Yudhoyono. Sri Mulyani Indrawati, reappointed finance minister, was clearly out to usher in a new political era in Indonesia.

There was a widespread perception that Bakrie's fortunes would reflect Indonesia's future path. If that is true, it is depressing. Today Sri Mulyani has been banished, quitting the government to join the World Bank as a managing director after charging in an interview with the Wall Street Journal that Bakrie had been behind the manufacture of a scandal over the US$710 million bailout of Bank Century in 2008, which at the time seemed poised to drag the country's banking sector into the muck of the global crisis. The point? To ensnare her and Boediono, the respected former Bank Indonesia head who became Yudhoyono's vice president.

Yudhoyono seems strangely lethargic in the face of Bakrie's resurgence. Golkar was nominally in the opposition after the 2009 national presidential election. The president should have been able to stop the action against the two officials back in October 2009 when he named his cabinet and, at the last minute, Bakrie brought Golkar in from the cold to rejoin the government. Yudhoyono could have extracted a promise that the Golkar leader would keep out of the fray. The president was at the height of his political power and personal popularity as a result of his strong electoral victory.

Instead, Sri Mulyani's resignation in May following months of bitter, highly political and inconclusive hearings in the House of Representatives, appears to have set the stage for five years of paralysis in which reform stops and Bakrie and his fellow businessmen go about business as usual.

Bakrie himself appears to be deeply enmeshed in a scandal involving former tax official Gayus Tambunan, who is charged with amassing vast wealth through taking bribes from corporations to cheat on their taxes. Tambunan has testified in court that companies that paid him off included subsidiaries of the Bakrie conglomerate. One report had Tambunan, whose latest shenanigans involve bribing his way out of detention on a regular basis, meeting Bakrie himself in Bali during a recent tennis tournament. Bakrie's lawyers and numerous Golkar politicians have denied that tale and preliminary criminal libel charges have been brought by Bakrie against five media outlets for running the story.

Bakrie has proven himself an adroit and ambitious politician who occupies a fairly unique place among Indonesia's upper-tier business community because he is a pribumi, or native Indonesian, while the bulk of the country's business establishment is dominated by ethnic Chinese. In May, he was appointed “managing chairman” of a new government joint political secretariat at a closed meeting of coalition parties at Yudhoyono's home, just two days after Sri Mulyani said she was leaving.

It is clear from his close confidants that he has his eye on the presidency, and as Indonesia's most powerful pribumi, he might appeal to the electorate despite his reputation as a corporate pirate. He is a Javanese, the dominant ethnic group, which gives him clout that Jusuf Kalla, a wealthy ethnic Bugis businessman and Golkar politician who served as Yudhoyono's vice president in his first term, was never able to muster. Kalla and Bakrie are fierce rivals.

Yudhoyono's Democratic Party has no one who looks capable of being a successor. Megawati Sukarnoputri, the leader of the Indonesian Democratic Party of Struggle, known by its Indonesian language initials PDI-P, appears to be a spent force. Wiranto and Prabowo Subianto, both retired generals, have been sanctioned by international rights organizations for their roles in attempting to suppress the East Timor independence movement, among other nastiness at the end of the Suharto era. Vice President Boediono seems to have no political ambitions, and aside from the tantalizing possible return of Sri Mulyani, whose support is largely limited to intellectuals and commentators, there appear to be few people at this point to challenge Bakrie.

So maybe Rothschild recognized something longtime Indonesia watchers didn't. Even as a minority shareholder, it doesn't hurt to be reflected in the glow of the leading presidential candidate, and one who, despite his reputation, could lead the country – albeit hardly in the direction of reform.

 


Taufik Tells PDI-P (and his Wife) To Give Younger Candidates a Chance
Ezra Sihite & Markus Junianto Sihaloho | October 25, 2011

How old is too old to run for president? For Taufik Kiemas, the answer is 68 — the age his wife, former President Megawati Sukarnoputri, will be in 2014.

Taufik, the chairman of the advisory board of the Indonesian Democratic Party of Struggle (PDI-P), said his wife, the party’s chairwoman, should reconsider her own plans to run in 2014.“It would be better if Madame thinks first before moving ahead [in the 2014 elections.] She would be 68 years old in 2014,” he said.

 

 

He said the PDI-P should be looking for a replacement for Megawati. “If we prepare younger members in the next three years, one of them will certainly emerge. The older members must give way,” he said.

Taufik’s feelings aside, a recent poll by the Indonesian Voting Network (JSI) found that Megawati and Prabowo Subianto, the founder of the Great Indonesia Movement Party (Gerindra), were the most popular potential presidential candidates for 2014.
Taufik declined to name any potential young PDI-P candidates, nor did he say whether his daughter, Puan Maharani, 38, would be among those groomed.
For her part, Puan said she was ready to run for president. “As a cadre, I’m ready to be assigned to any position, especially if it is mandated by the party,” she said. “My grandfather was president, my mother was also president, and hopefully in 2014 we can win.”

The same family political dynamics were seen during the PDI-P’s last congress, when Taufik pushed for the creation of a deputy chair post in the party, ostensibly for Puan, which was rejected by Megawati’s backers.
The couple have failed to see eye to eye for years, and Taufik said it was his opinion that Megawati should not run, not the party’s.

“Bung Karno once said that leaders would always be born if they were well prepared. Every era would give birth to a leader and they had to be prepared,” he said, referring to the country’s founding president, Sukarno, Megawati’s father.
He said the country and its political parties needed to do a better job of grooming as many potential young leaders as possible.
Taufik added that if the PDI-P insisted on fielding the same old candidates in the 2014 legislative and presidential elections, it risked becoming a laughingstock.
“We once laughed at Suharto when he still wanted to be president at 70. How come we are following in his steps?” he said.

Maruarar Sirait, a young PDI-P politician, rejected the idea that Megawati was too old and said the party should throw its weight behind her in 2014. He said the results of the JSI survey, which was not commissioned by the party, showed that Megawati still had the support to be a successful candidate in 2014. “If all the requirements
are met, then there is no reason to forbid Mrs. Mega to run for the presidency,” Maruarar said.

Taufik’s comments also sparked a debate among politicians over age requirements for presidential candidates. Priyo Budi Santoso, a deputy House speaker from the Golkar Party, said that age should not become an issue
for anyone wishing to serve the state.
“Megawati is also a central figure in this country. If a figure of her calibre still wants to go forward [with a presidential candidacy] then it should be respected. And the same goes for Aburizal Bakrie.
If he is pushed [to run], do not forbid him,” Priyo said, referring to the Golkar chairman, who will be 66 when
the presidential election takes place.

Priyo said there was no need to rush younger leaders. “If Golkar wants to back senior figures it should be allowed to, don’t scold them,” he said.

 

 

Jusuf Kalla:

Born May 15, 1942

Aburizal Bakrie:

Born Nov. 15, 1946

Megawati Sukarnoputri:

Born Jan. 23, 1947

Wiranto:

Born April 4, 1947

Susilo Bambang Yudhoyono

Born Sept. 9, 1949

Prabowo Subianto:

Born Oct. 17, 1951

Ani Yudhoyono:

Born July 6, 1952

Sri Mulyani Indrawati:

Born Aug. 26, 1962

 

 

Golkar's return

The Jakarta Post
Publication Date : 28-10-2011

Indonesia, dubbed the world's third-largest democracy, may vote for business tycoon Aburizal Bakrie as the president in 2014 to mark the Golkar Party's return to the top executive post, which has eluded the New Order political machine since 1999.
Such a possibility is not to be scoffed at, as the party's endorsement of Aburizal to run in the presidential election in three years is just a matter of formality at this point, as evinced in the party's executive meeting now under way in Jakarta. Although Aburizal downplays his nomination, the mood within the country's second-largest party is in favor of the businessman-cum-politician, who has always been on the shortlist of Indonesia's richest people.
Financial might may be behind Golkar's selection of Aburizal, but the public is very aware of his political credentials. He decided to stay out of the Cabinet as soon as he was elected party chairman, unlike some of his counterparts within the ruling coalition, to lead Golkar as a respected, if not equal, partner of President Susilo Bambang Yudhoyono.

Golkar under Aburizal sent shockwaves throughout the national political stage as the party, defying the coalition deal, voted for a House of Representatives' investigation into the controversial bailout of Bank Century last year and an inquiry into alleged tax graft earlier this year.
Aburizal has also survived, at least until today, political bullying related to the unabated mudflow disaster in the East Java regency of Sidoarjo, which many have blamed on a gas company partly owned by the Bakrie family, and alleged tax evasion cases involving Bakrie Group subsidiaries.

The latest Cabinet reshuffle is another display of Aburizal's political clout, with the entry of his close confidante Sharif Cicip Sutarjo into the Cabinet as the maritime affairs and fisheries minister, replacing Fadel Muhammad.
It is not an exaggeration, therefore, when one Golkar regional leader says the party has no other choice for its presidential nominee than Aburizal.
Indonesian voters must respect Golkar's decision to nominate Aburizal as its presidential candidate, with all his pluses and minuses. But democracy also gives the voters liberty to accept or reject any candidate - including Aburizal - who they feel will be unable to deliver promises.
The problem facing Indonesia's democracy is that voters are not used to making choices based on candidates' track records but their appearances, which are prone to manipulation. In this area, Aburizal holds the advantage due to his control of a media empire that he may exploit to boost his image.

With less than three years before the election, voters will need to focus on what potential candidates have done rather than what they have said or promised. The challenges facing Indonesia after 2014 are daunting, so the nation cannot afford to choose the wrong leader.

 

 

Golkar announces Bakrie as candidate for 2014 presidential elections
The Jakarta Post, Jakarta | Mon, 09/12/2011 4:27 PM

Aburizal BakrieAburizal Bakrie

 

 

The Golkar Party has come up with a consensus during the national consolidation meeting in Denpasar, Bali, to support party chairman Aburizal Bakrie in his run for the 2014 presidential elections.
"The [consolidation] meeting was initially scheduled to run for two days from Sunday to Monday but it was shortened since the Golkar executive board unanimously agreed to support Aburizal Bakrie as the party's presidential candidate for 2014," said Ketut Sudikerta, chairman of Golkar's Bali chapter, on Monday as quoted by Antara news wire.

Ketut said that Bakrie was the right man to represent the people.
"Pak Ical is the right figure to lead Indonesia in the future. We are optimistic lending our support to him," Sudikerta said, "Ical" refers to Aburizal's nickname.
According to Ketut, the Bali consensus will be officially formulated at the party's national leaders meeting, which will be
held as soon as possible.

Ical tones down presidential bid talk
Bagus BT Saragih, The Jakarta Post, Jakarta | Thu, 10/27/2011 6:48 AM

Despite signs of internal support, businessman and Golkar Party chairman Aburizal “Ical” Bakrie is playing down plans to run for president in 2014.
Ical, dubbed one of the strongest potential contenders in 2014, has been called Golkar’s most appropriate candidate by party officials at the regional level.
“People have aspirations … that’s normal. This is democracy,” Ical said on the sidelines of Golkar’s national executive board meeting in North Jakarta on Wednesday.

Ical said he would not rush into running for president, wanting to focus on improving the popularity of Golkar’s legislative candidates during the run-up to the election.
“In the last legislative election we received 14.45 percent [of the vote]. Recent surveys show our popularity is at 18 percent. I believe we can reach 20 percent, or even 30 or 35 percent, in the 2014 election – more than the PDI-P [Indonesian Democratic Party of Struggle] received in the 1999 election,” Ical said in his speech at the meeting.
“Our study of the aspirations of Golkar at the grassroots level nationwide is still not enough.”
Ical said Golkar’s would name its presidential candidate in 2012.

Observers expected the meeting to be a forum for the party to formally back Ical as its candidate in 2014.
The agenda of the meeting, which ends on Friday, includes a discussion of the upcoming election.
The meeting on Wednesday was attended by more than 700 Golkar members from across the nation, who crowded the meeting room while shouting “Go Golkar!”

Delegates applauded during the opening address of meeting chairman Sharif Cicip Sutarjo after he dubbed Ical as “the most recognizable figure to be the next president.”
A Golkar member from South Kalimantan who declined to be named said that party officials down to the regency level in the province agreed to support Ical should he be named the party’s candidate.
“We have no other option,” another Golkar member from Papua said.

Analysts have called Ical’s reluctance to openly or quickly accept support for a presidential bid part of a wait-and-see strategy to gauge the response of other major political groups.
Several surveys have named Ical one of the most popular potential candidates in 2014.

However, observers have said Ical’s bid could face serious threats from other potential hopefuls, such as former Army Strategic Reserves Command chief Lt. Gen. (ret.) Prabowo Subianto, the founder of the Great Indonesia Movement Party (Gerindra); and former Finance Minister Sri Mulyani Indrawati.
Some surveys, however, have placed Ical behind PDI-P chairwoman and former president Megawati Soekarnoputri, the daughter of the nation’s first president.
Observers said that the ongoing mud flow disaster in Sidoarjo, East Java, which has been linked to an operational failure by energy companies belonging to the Bakrie family, might be a liability that competitors could exploit during the race.

Others said that the Democratic Party’s best option to replace Yudhoyono, who cannot run for relection due to term limits, would be to nominate reform icon Sri Mulyani as its presidential candidate.
Yudhoyono’s latest Cabinet reshuffle, which included the firing of Fadel Muhammad as Maritime Affairs and Fishery Minister, was seen by some as an effort to please Ical.

Fadel, a top Golkar executive, had close ties to Golkar chief patron Akbar Tandjung, who frequently opposed Ical’s policies within the party.

 

 

 

 

 

 

Hasil Audit BPK Lumpur Lapindo - Presentation Transcript

1. AUDITING THE HOTMUD ERUPTION IN SIDOARJO, EAST JAVA, INDONESIA WITH ENVIRONMENTAL PERSPECTIVES SIDOARJO DISASTER A Case Of State’s Failure to Control Corporate Greed Prof. Dr. Anwar Nasution Chairman of The Audit Board Of the Republic of Indonesia 11th Meeting of INTOSAI-WGEA Arusha, Tanzania 1 25-29 June, 2007

2. Introduction Between November 2006 and March 2007 BPK audited the hot mud eruption at an exploration well of Bankjarpanji-1 owned by PT Lapindo Brantas Inc. (LBI). LBI is an oil company owned by a family of Mr. Aburizal Bakrie, the current Coordinating Minister for Social Affairs and a prominent member of a leading political party. The mud eruption started at a five thousands cubic meter a day to presently 170 thousands cubic meter. In doing the audit, BPK was assisted by a group of geologists, scientists, economists from the University of Brawijaya in Malang and other leading Universities. BPK had also access to reports prepared for the government by foreign consultants. The objectives of the audit are to asses the compliance of:1. To assess the compliance of: (a) the company with the law and regulations on oil exploration and exploitation; (b) the three layers of government (central, provincial and district) in handling the disaster to: (i) help the victims, (ii) mitigate social and economic impacts of the disaster to Sidoarjo area and East Java Province and (iii) force the responsible parties to adhere to the law and regulations on oil exploration and exploitation.2. To assess the effectiveness of the National Team’s activities in mitigating the impacts of the eruption. 2

3. Location of the eruption Exhibit 1. The Location of the eruptionThe eruption is located in Sidoarjo – Sub District of Porong, Regency of Sidoarjo, 30 km of Surabaya, the capital city of East Java Province. Home to 34 million people, East Java is the second largest province in Indonesia. Surabaya area is the second industrial zone of the country and its seaport of Tanjung Perak is also the second largest Bali in Indonesia. Meanwhile, Juanda Airport in Surabaya is the major airport in the province; – The volcano is located 150 meters away from Exhibit 2 The vital infrastructures map Banjarpanji-1 well and few meters away from major economic and social infrastructures linking Surabaya and hinterland (Exhibit 1).The Significant of Sidoarjo Regency – Population density of Sidoarjo area is very high at High Voltage Transmission 2,843 persons/sq.km; Toll Road – The disaster area is passed by various important economic infrastructures such as roadway and the Railroad only toll road in the province, railways, electric grid, telephone lines, and gas pipe (exhibit 2); – The economic structures of Sidoarjo are mainly: Gas Pipe line Manufacturing industry and small scale farming. 3

4. Key Events Leading to the Eruption Exhibit 3 displays the location of the hot mud eruption close to drilling platform or boring well of LBI at Banjarpanji-1. Exhibit 3 LBI together with PT. Medco Brantas E&P and Location of the Eruption Santos Brantas Pty Ltd has interest and right to the Brantas Block; The Eruption LBI started to drill (spud in) Banjarpanji-1 well, on March 8, 2006 and reached the depth of 9.297 feet on May 27, 2006; At this depth, the exploration of the Banjarpanji- 1 well has continuously had well problems such as well kicks (fluid from the formation Banjarpanji-1 well penetrated into the bore hole) and losses (fluid or mud from the bore hole went out to the formation). Eventually, on May 29, 2006, the mud eruption took place near the exploration site. 4

5. The cause of the mud eruption LBI insufficiently handled the problem in the Banjarpanji-1 well that cracked the formation and created channels for the mud in the clay/shale stone formation flowing to the surface. Sedimentary and volcanic overburden (pleistocene) B Upper Kalibeng FormationA (pleistocene) Interbedded sands and muds Kujung Formation limestone aquifer (oligo-Miocene) 5

6. Strategies to Stop the MudFlows The company and the government have adopted four strategies to stop the mudflows, namely: 1. to cap the wellhead from above; 2. to snub the well from the sides; 3. to dig three relief wells and again tried to plug the mudflow from the side; 4. to drop concrete balls linked by chains into the mud volcano; 5. As all the above four strategies have failed, the government is now considering to use a new but untested strategy, namely, to plug the mud by building a dam around the crater. The amassing mud will be used to counterweight against the out flowing mud from the mouth of the volcano. Many experts, however, believe the flow is unstoppable. 6

7. THE IMPACTS OF SIDOARJO DISASTER (as of February 2007)LAPINDO BRANTAS Inc. •10,462 houses Loss of properties: •CORPORATE GREED •23 schools residential, governmental, •INCOMPETENCE •2 Gov’t. offices educational, religious•INADEQUATE EQUIPMENT: •23 manuf. facilities and economic buildings BOREHOLE WAS NOT •15 mosques PROTECTED BY STEEL Destruction of structures, Power grid damages CASING PRESSURE facilities, installations 70-150 Kilo Volt Refugees: CONNECTION FRACTURING •7,248 house- Gas pipeline damages PROPAGATE TO THE holds; SURFACE •26,317 victims Toll road damages Railway track damages UNABATED FLOOD- Destruction of DISRUPTIONS TO FLOWS OF HOTMUD ING vegetation •306.2 Ha of paddy fields ECONOMIC ACTIVITIES REDUCTION OF crops, livestock •64 Ha of sugar cane crops ECONOMIC CAPACITIESUNCERTAIN END! ECONOMIC LOSSES BOTH IN Sedimentation of Bigger risks THE SHORT- & LONG-TERM :The volume keeps on Porong estuaries of floods TotalEconomic Cost : US$3,46 B Total Financial Cost : US$0,52 Bincreasing from 5,000 The Gap : US$2,94 Billioncubic meter/day at the Contamination of Reduced soil soil fertilitystart to reach 170,000cubic meter/day in Contamination of •Unsafe domestic waterFebruary 2007. Now, underground water •Affecting aquatic & Loweredthe flood has been tables & surface water marine eco-system life-supporting &inundating 470 Ha of carrying capacityland, and burying 9 7 Land subsidence(nine) villages.

8. Government Initiatives In the beginning, the central government gave the initiatives to handle the disaster to both the company and local (provincial and district) governments. Because of the lack of power, expertise and resources; local governments could not do much; Aid from central government has been limited as the company is expected to fully compensate the victims and bear some of the clear cost. But, on the other hand, there is no enforcement mechanism to implement the company’s financial responsibility; In spite of the magnitude of the destruction the government has not declared the mudflow as a disaster; Few months after the eruption occurred, in September 2006, the central government set up the National Team for Handling the Mud Flow in Sidoarjo (The Team). The Team was given eight months to address three issues, namely: 1) to stop the mudflow, 2) to mitigate the impacts of the mudflow, and 3) to minimize the social, economic, and environmental impacts. The achievement of the Team is also negligible because of the lack of coordination with the company and local governments; On March 31, 2007, one year after the mudflow started, a new team was established by the central government. The new team, again, is not well equipped with sufficient authority, expertise, and resources. There are also lack of coordination between the Team and other government agencies including Provincial and Regency governments. 8

9. Audit Findings
The catastrophe and its handling indicates a number of issues: The mishap is a man-made disaster; Regulations on exploration and exploitation of oil and gas are not sufficiently protected people and environment, particularly in a densely populated areas; The disaster caused by LBI’s negligence as in drilling the well, it uses the un-reputable company (most likely its own subsidiary) to do the drilling, with inadequate and used equipments and inexperience technicians. These indicate a weakness in government monitoring and enforcement of the rules and regulations as well as contracts with the oil and gas companies; Slow and inadequate response of the government in handling the impact of the disaster to help the victims and to build alternative economic infrastructures and relocate them to safe places. These have exacerbated the negative impacts of the mishap; Little progress in the prosecution of those responsible for the 9 disaster;

10. Audit Findings………………………The absence of protection of property rights for the victims who have lost more than 11 thousands homes and two dozen businessesthat have been buried in more than 6 sq km under 20m deepcovering nine villages in Sidoardjo area. The choked off oftransportation to the main seaport of Tanjung Perak and JuandaAirport, near Surabaya, have also negatively affected the economy ofhinterland in the Southern part of East Java;The absence of effective, low cost of enforcement of contract.Implementation of the company commitment to takeover the victims’destroyed properties and to pay some of the clear cost is negligible;The government has never conducted a thorough risk assessment inorder to develop action plan or activities;There is no consistent result from researcher about toxic sludge andwater of the mud.
People in nearly villages complained that toxicsludge and water have penetrated their drinking wells, agriculturefields, fish ponds, marine ecosystem and homes. 10

11. RecommendationsThe government should thoroughly investigate the causes of the disaster andprosecute those responsible for causing it;The government should officially declare the mudflow as a disaster and take over thedisaster management to handle the mishap and mitigate its social and environmentalimpacts;The government should immediately help the victims of the disasters, restore theirlivelihood and restore economic activities of the province by rebuilding and relocatingthe damaged infrastructures. The slow response of the government has exacerbatedthe negative impacts of the disaster on human live, environment and economy;The government should conduct a comprehensive research to ensure the toxicity ofthe sludge and water;The government should revise and upgrade the policy implementation andmonitoring system of the oil and gas exploration and exploitation to protect thepeople’s life, the environment and the economy;
Based on Indonesia’s experiences on previous natural disasters and this man-mademishap, the government should develop
a comprehensive disaster policy and build itsinstitutional capability to cope with those unexpected problems. Indonesia is prone toboth natural and man-made disasters. The country is prone to natural disasters, liketsunami in December 2004
and earthquake and volcano eruptions in 2006 becausethe country is located on both the Australia-Asia tectonic plate and ring of fires of theworld.

 

 

 

The Tragedy Of Lapindo
Posted on February 3, 2010 by EastJava.com
Lapindo Hot Mud - Sidoarjo

Lapindo Hot Mud

This is not one of East Java cultural heritage or even Tourism destination, Lapindo hot mud is such a tragedy for
Sidoarjo people as victims of this thing happened. By this natural disaster, we should have to be more concern about the Earth and the society within the world.

The Sidoarjo mud flow or Lapindo mud, also informally abbreviated, a contraction of Lumpur Sidoarjo (lumpur is the Indonesian word for mud), is a mud volcano[1] in the subdistrict of Porong, Sidoarjo in East Java, Indonesia that has been ongoing since May 2006. Approximately 2,500 m³ (88,000 cubic feet) of mud are expelled per day, which is equivalent to the contents of a dozen Olympic-size swimming pools.[2] It appears that the flow will continue indefinitely. As of November 2008, the Sidoarjo mud flow is contained by levees, but further breakouts are possible.

Mud volcano systems are fairly common on Earth, and particularly in East Java province. Beneath the island of Java is a half-graben lying in the east-west direction, filled with overpressured marine carbonates and marine muds.[4] It forms an inverted extensional basin which has been geologically active since the Paleogene epoch.[5] The basin started to become overpressured during the Oligo-Miocene period. Some of the overpressured mud escapes to the surface to form mud volcanoes, which have been observed at Sangiran Dome and near Purwodadi city, 200 km (124 miles) west of Lusi.

The East Java Basin contains a significant amount of oil and gas reserves and therefore the region is known as a major concession area for mineral exploration. The Porong subdistrict, 14 km south of Sidoarjo city, is known in the mineral industry as the Brantas Production Sharing Contract (PSC), an area of approximately 7,250 km² which consists of three oil and gas fields: Wunut, Carat and Tanggulangin. As of 2006, three companies — Santos (18%), MedcoEnergi (32%) and PT Lapindo Brantas (50%) — had concession rights for this area; PT Lapindo Brantas acted as an operator

On May 28, 2006, PT Lapindo Brantas targeted gas in the Kujung Formation carbonates in the Brantas PSC area by drilling a borehole named the ‘Banjar-Panji 1 exploration well’. In the first stage of drilling the drill string first went through a thick clay seam (500–1,300 m deep), then sands, shells, volcanic debris and finally into permeable carbonate rocks.[1] At this stage the borehole was surrounded by a steel casing to help stabilise it. At 5:00 a.m. local time (UTC+8) a second stage of drilling began and the drill string went deeper, to about 2,834 m (9,298 ft), this time without a protective casing, after which water, steam and a small amount of gas erupted at a location about 200 m southwest of the well.[7] Two further eruptions occurred on the second and the third of June about 800–1000 m northwest of the well, but these stopped on June 5, 2006.[7] During these eruptions, hydrogen sulphide gas was released and local villagers observed hot mud, thought to be at a temperature of around 60 °C (140 °F).[8]

From a model developed by geologists working in the UK,[7] the drilling pipe penetrated the overpressured limestone, causing entrainment of mud by water. The influx of water to the well bore caused a hydrofracture, but the steam and water did not enter the borehole; they penetrated the surrounding overburden and pressured strata. The extra pressure formed fractures around the borehole that propagated 1-2km to the surface and emerged 200 m away from the well. The most likely cause of these hydraulic fractures was the unprotected drill string in the second stage of drilling.[7] Borehole protection by steel casing is a common procedure in oil or gas exploration.

More info: www.sidoarjo.eastjava.com

 

 

 

Four years of the Lapindo mudflow in Indonesia

Media Summary
The Lapindo Mudflow was caused by the oil drilling company Lapindo Brantas Inc over four years ago. The man-made disaster is still having an impact on the people of Sidoarjo, Indonesia. 26/05/2010

 

 

New research puts spotlight on Lapindo

UK scientists have made public evidence which they claim shows Lapindo Brantas’ drilling for gas was responsible
for unleashing a mud volcano in Indonesia which left tens of thousands of people homeless, according to reports.

 

 

 

The Lapindo Titanic

Monday, 01 August 2011 00:00
Bosman Batubara
Edition 105: Jul - Sep 2011

 

 

Review: When the law betrays, literature must speak

The struggle waged by the Lapindo mudflow victims has been a long and exhausting one. For almost four years, displaced villagers from Sidoarjo have been pressing PT Lapindo Brantas to deliver on compensation for their sunken assets – a feat made the more challenging by the fact that even Indonesian law, a citizen’s last protector and refuge, has betrayed them. Determined to tell the world about what it’s like to cope with disaster day by day, Gus Maksum – a survivor of the now lost village of Jatirejo – has published a memoir, Titanic Made by Lapindo.

Gus Maksum is a local Kiyai, a teacher, and a writer. Before the onset of the mudflow on 29 May 2006, he was responsible for approximately 500 students at the school in Jatirejo that he headed. When disaster struck he hastily moved his classes to Krembung, another sub-district in Sidoarjo, but also began using his time to keep a careful record of his own experiences and those of other victims.

Although the Indonesian media have followed the Lapindo mudflow disaster closely, stories in the press do not delve nearly as deep as Gus’s memoir. For me, reading the book felt like having a personal and profound dialogue with one of the victims. The author helps the reader to see many things, ranging from problems caused by the loss of the village mosque to the implications of compensation never received. He includes stories of life in the refugee camp, and what dike construction really meant to the villagers. In his artfully titled chapter, ‘It’s all about the project, mate!’, he vividly describes how, in the eyes of mudflow victims, efforts at mitigation appeared to be little more than a game that attracted politicians and business people ready to exploit chaos for self-interest.

The fact that this book – a first-hand, personal account of the disaster as experienced by its victims – should exist at all is truly remarkable. Many people have written about the Lapindo mudflow disaster, but most were merely temporary observers. Clearly an author’s position in relation to a subject fundamentally shapes the outcome of his or her work. An observer is an observer; that is to say, detached. This book, however, was born from the lived experiences of the disaster’s victims, people who spent each day caught in the struggle to survive the enormous physical, emotional and financial impact of the Lapindo mudflow.
No justice

In 2009, the East Java Regional Police decided to issue an ‘Order to Stop an Investigation’ (SP3), thereby ending a criminal investigation into PT Lapindo Brantas’s responsibility for the mudflow disaster. From a legal point of view, the pendulum seems to have made a powerful sweep away from justice for the people and towards victory for the gas and oil giant. The SP3 implicitly states that PT Lapindo Brantas is not responsible for the mudflow on the grounds that the disaster was naturally occurring and neither industrial nor man-made. The fact that the regional police would back an order such as the SP3 may come as no surprise to the mudflow victims for, as Gus Maksum argues in his book, ‘The villagers believe that the ultimate goal [has been] to remove the people from their village’. At this point, the East Java Regional Police are clearly more concerned with the interests of PT Lapindo Brantas than with those of the victims.

The SP3 has lent a new air of credibility to PT Lapindo Brantas’s denials of culpability. It has allowed the firm – owned by Aburizal Bakrie, a former minister and one of Indonesia’s richest individuals – to continually postpone the payment of compensation that it is obliged, under Presidential Regulation 14/2007, to provide to mudflow victims for their losses. Under that regulation the government ordered Lapindo Brantas to pay for damage to villagers’ property by compensating losses in two payments: 20 percent of the total amount immediately following the order, and the remaining 80 percent in a second payment one month before the displaced households faced the end of their two-year home rental contracts in July 2008.

From the disaster’s earliest days, scientific experts have been collecting and reviewing data in an effort to deduce the origins of the mudflow. While it does not seem likely that the global community of geoscientists will reach a united conclusion any time soon, the debate itself has become a hot political issue. On one side stand scientists who, much like Lapindo, assert that the mudflow was a natural disaster triggered by tectonic activity along the Watukosek fault during the Yogyakarta earthquake of 27 May 2006. Countering their claims, however, is a broader circle of scientific experts who point to growing evidence that drilling pressures caused an underground blowout in Banjar Panji-1 well, triggering the mudflow and therefore making it an industrial disaster. One of these scientists – Richard Davies, an expert on mud volcanoes at Britain’s Durham University – has led expert investigations into the mudflow and its effects on Sidoarjo since 2006. In June 2008 he went on record saying ‘We are more certain than ever that the Lusi mud volcano is an unnatural disaster and was triggered by drilling the Banjar-Panji-1 well.’ In February 2010, he and a group of experts made international news again by releasing a report outlining new evidence that an operating error committed by PT Lapindo Brantas was what led to the disaster.

The East Java Regional Police issued the SP3 despite the weight of expert opinion, and despite new evidence it has not yet been revoked. We have all become witnesses to the creation of a painful precedent, one in which the law fails to serve the best interests of victims. In cases like this, literature becomes an even more important and powerful public medium. It brings readers close to the lived experiences of those displaced by the mudflow disaster. Gus Maksum’s warm, conversational tone connects readers personally to more than just a moment in history: it connects them to the truth.

S.H. Maksum Zuber, Titanic Made by Lapindo, Yogyakarta: Lafadl Pustaka and The Taiwan Foundation for Democracy, 2009.

Bosman Batubara (http://annelis.wordpress.com) is a Masters student in the
Interuniversity Programme on Water Resources Engineering, Katholieke Universiteit Leuven and Vrije Universiteit Brussel.
He was formerly a community organiser at Lafadl Initiatives, working with victims of the mudflow on a women’s economic empowerment project. He would like to thank Rayna Rusenko for assistance in preparing this review.
Inside Indonesia 105: Jul-Sep 2011

 

 


LAPINDO BRANTAS AND THE MUD VOLCANO
SIDOARJO, INDONESIA

 

 


 Bakrie, Vampires and Presidents
Posted on September 15, 2011 by Oigal
3Share

Well the Drum did promise another football post but the latest news that the chief mud brother was to be nominated as the GOLKAR Indonesia Presidential Candidate in 2014 did warrant its own post.

It was widely reported this week that Indonesia’s second-largest political party Golkar on Monday picked tycoon and power-broker Aburizal Bakrie as its presidential candidate for elections in 2014. “The entire board of Golkar agreed on one thing — that Bakrie would become our presidential candidate in 2014,” the state news agency Antara quoted Ketut Sudikerta, the chairman of Golkar’s Bali chapter.

One has to wonder at the voting intentions of the 40,000 plus residents of the 12 (or is 15 now) villages displaced by the toxic, mud flow that still flows from a drill site operated by his family gas company, Lapindo Brantas.

Of course, the his supporters deny allegations of responsibility in regards to the ongoing mudflow and lack luster government response. We should not forget that the person in question was also Minister for People Welfare at the time. Serious, don’t laugh its true, you couldn’t make this stuff up.

I guess we must take his supporters seriously as they are the same supporters who deny that the Bakries and their companies are mired in allegations of corruption and tax fraud saying such allegations are “baseless and untrue” Yet curiously these rumours will just not die. Certainly the Vampire like resurrection of the family companies from near bankruptcy time and again has raised eyebrows in the financial community. Certainly the effort of our very own Buffy the Vampire Slayer, Sri Mulyani failed to drive a stake through their black hearts. Indeed, she was exiled and us thus far resisted calls to return to the fight.

Perhaps the best way to the truth would be to google, Gayus (Where is he anyway now? Seems to have disappeared), Bakrie, LapIndo and for a laugh “Tennis in Bali with Gayus”

As an interesting aside “Ical” Aburizal’s local polite nickname nickname (as opposed to some of the more common names heard) actually means Vampire in the lexion of the neddortnwod people. There may be some truth to that as it is spoken in whispers in village huts across the country that a picture of the ousted reformer, vampire slayer and finance minister Sri Mulyani Indrawati thrust towards Ical’s face will still cause him to cringe and hiss in the fashion of the undead facing a cross. It may be just a village myth, however it is reported that across the country that people are beginning to wear Sri Mulyani for president badges in place of the more traditional garlands of garlic for protection.

Still it could be funnier, we could end up with PKS politician (Not sure what PKS stands for anymore, going on recent alleged sandals Porn Kollective Society but that would cynical) , Tifatul Sembiring as a nominee. You remember him. He was the guy who went into such orgasmic rapture when First Lady Obama shook his hand, he could not even accurately recall what occurred without tweeting versions of the event that never even occurred.

Alternatively, we still the chance that many Presidential Candidates may be elected but be unable to travel overseas without fears of being arrested from Human Rights Abuses.

Ah Indonesian Democracy, going to be interesting time between now and 2014.

 





Bakrie Group Denies Lapindo Pay Delay

Dessy Sagita | September 26, 2011

The Bakrie Group denies there has been any delay in the compensation for land affected by the Lapindo mudflow.

“The full financial commitment will be completed as per the 2009 agreement, which is on or before December 2012,” said Christopher K. Fong, the international spokesman for the group.

Earlier this week, East Java Governor Soekarwo told Vice President Boediono during a visit to the area that Bakrie subsidiary Minarak Lapindo Jaya, the holding company for the gas drilling firm widely blamed for causing the mudflow, had only paid compensation for 72 percent of the inundated lands.

Soekarwo urged the company to pay out at least 80 percent by the end of the year.

But Fong said the Bakrie family had provided $650 million for the affected residents, and said the number equated to 13,000 families or 40,000 individuals.

The remaining financial support amounts to $130 million and is being disbursed according to schedule, Fong said.

He declined to respond to Boediono’s proposal that the impacted land be turned into a “nature recreation” area.

Boediono said he would require Soekarwo and the district heads to use the land rather than leave it abandoned.

But Fong said the area impacted by the mudflow required greater scientific research to verify that the mud was not toxic and to see if plant life could survive.

“We are not even sure if the technology exists to helps us answer these questions,” he said.

The mudflow, which began erupting in May 2006 after the blowout of one of Lapindo’s natural gas wells, has destroyed hundreds of homes, swamped 720 hectares of land and displaced thousands of people.

The Sidoarjo Mudflow Mitigation Agency (BPLS) said on Wednesday that the area was under continued threat, and raised the alert level for residents living nearby .

The agency said that the underground mud volcano had begun to erupt again after lying virtually dormant for years, threatening to overflow and hit residential areas, potentially cutting off roads and railways.

Authorities added another meter to the height of the dikes and reinforced them with rocks held together by chicken wire. But rain could worsen the surging mudflow and cause the dikes to weaken.

 

 


Lake Lapindo, also known as Mr Bakrie's swimming pool

My trip to Indonesia wasn't just to escape the state-of-war-and-siege that had been declared in the centre of Sydney for APEC, but also to work on a couple of my other research projects. Nevertheless, I had time to do a bit of disaster tourism, visiting the poisonous mud volcano that was created in Sidoarjo, just south of Surabaya airp

My trip to Indonesia wasn't just to escape the state-of-war-and-siege that had been declared in the centre of Sydney for APEC, but also to work on a couple of my other research projects. Nevertheless, I had time to do a bit of disaster tourism, visiting the poisonous mud volcano that was created in Sidoarjo, just south of Surabaya airport.

I was running late for the Panji festival because my plane from Jakarta to Surabaya had been cancelled, as had all the planes to Surabaya that morning. I feared another airport disaster, but it turned out that they just decided to close down Surabaya airport, the busiest hub to Eastern Indonesia, because the President was visiting! And they wonder why Indonesia has problems with national productivity (while I was in Jakarta Kompas had a great expose on this kind of self-important overkill that preoccupies Indonesian public officials. One of their journalists got hold of the—illegal—price-lists that local police stations produce for those who want to hold motorcades. You too can stuff up the traffic, for a price).

Anyway, despite being 4 hours late, I couldn't resist stopping off on the road to Malang to see the Lapindo disaster. For those not familiar with this, just over a year ago employees of the company Lapindo were doing exploratory drilling when they set off a huge eruption of poisonous mud. There are various accounts of how this occurred. Mr Bakrie, one of the owners of Lapindo, but also a government minister, claims it is entirely natural, and he continues in his post. Others more expert claim that it is because the drillers did not follow procedures—basically they cut corners to save time and money by not using proper casings on the drills. Whatever the cause, the mud continues to flood out. It has destroyed a major highway, ruined factories and other forms of livelihood, and most importantly wiped out the houses of between 12,000 and 13,000 people. The mud is still hot, and the sulphurous smell is horrendous. A number of people have already died in attempts to stop the flow (including the dropping of large concrete balls down the main source).

The victims of the disaster show sightseers around. For Rp20,000 you can get a bike ride up to the central lake, and other enterprising people have made DVDs of the event, including the related explosion of a Pertamina gasline in November 2006. The people in the area claim to have received small amounts of payment from Lapindo for six months, but so far have not received any real compensation, and are reliant on government handouts. Predictions are that the eruption is creating a huge vacuum under the mud lake, and that the whole area could collapse.

 

Lapindo Mud and Bakrie's Responsibility



Who doesn’t know Aburizal Bakrie? A well-known Indonesian tycoon, who is also known as the richest man in South East Asia, has been dealing with lots of problems in his life, including the ‘Lapindo Mud’ problem which has made thousands of innocent people homeless till now. Okay, for you who has no idea of this notorious ‘Lapindo Mud’ case, let me give you a brief detail of what really happened years ago. Below is a quote I took from a local magazine in 2006.

“With the Bakrie Group out of its financial mess, along came the mud to entrap it once more. The mud seepage at the PT. Lapindo Brantas drilling site at Porong, Sidoardjo in East Java that began as far back as May this year is still spluttering away, so far having swallowed a toll road, the Pertamina gas pipeline and the livelihoods of thousands of people.

The government has been adamant that the company has to bear the cost of compensation programs, although the Sidoardjo administration has also had to put its hands into its pockets. At the end of last year, senior figures in the government, not least Finance Minister Sri Mulyani Indrawati, were battling to limit the damage to the stage budget.

Aburizal Bakrie found himself in a dilemma. Speaking on November 22 in his capacity as chief social welfare minister, the said Lapindo should be held responsible for the drilling accident. “The important thing is the well-being of the people who live in the area. It is not important who controls Lapindo, the company is the one who should be held responsible.”

The comment came after Fuad Rahmany, the head of capital market watchdog Bapepam, said a move by Lapindo’s parent company, PT Energi Mega Persada, to sell stakes in firms that control Lapindo was “not appropriate”.

Sri Mulyani, Rahmany’s boss, also backed up Bapepam’s stance on the divestment. Aburizal Bakrie appealed for the Lapindo divestment to be kept out of politics, but given that the disaster has brought such enormous costs to the public and the state, it’s hard to see how it can be kept out of the political arena.

The Financial Times added to the speculation that the Bakrie Group was trying in some way to dodge responsibility when it disclosed the presence of James Belcher behind the Freehold Group, which was to buy the distressed Lapindo assets until the company scrapped the plan at the end of November.

Freehold is registered in the tax haven of the British Virgin Islands, and Belcher himself is a long time friend of Aburizal Bakrie. No details were provided on Freehold’s position on compensation for victims of the all-engulfing mud.

In an interview with FT, Belcher admitted he had engaged in some deals with Bakrie family in the last 25 years. No details are available on what those deals may have been, but an internet search reveals that a James Belcher is implicated in an influence-buying case involving Senator Chris Dodd (Democrat, Connecticut). Dodd, the general chair of the Democrat National Convention during the ’96 election cycle, has repeatedly scoffed at the notion he had anything to do with fundraising drives, now at the heart of government probes.

Belcher has also served as president of Lewis and Peat Rubber L.P., a company that filled for bankcruptcy in 2000. Lewis & Peat, a trading company with activities in Singapore, London, and Connecticut, was a subsidiary of Bakrie’s PT Bakrie Sumatra Plantation Tbk….. “

Well, if Bakrie is so rich, why doesn’t he hold responsibility for all those people? Another injustice has happened in Indonesia. And as usual, the poor are victimized here.

 

 

 

 


15 New Parties Register For 2014
Fifteen new political parties registered for the 2014 general elections ahead of the deadline on Monday night, an official said.
Ronna Nirmala | 12:37 AM August 23, 2011

Fifteen new political parties registered for the 2014 general elections ahead of the deadline on Monday night, an official said.
Sucipto, a spokesman for the Justice and Human Rights Ministry, said the registration closed on Monday at 11:59 p.m.

The Pancasila Democracy Party was the last to register at about 9 p.m. One party that had already registered with the ministry, the Indonesian Nation Sovereignty Party, withdrew its name on Monday without explanation.

Also on Monday, representatives of the Independent People’s Union Party (SRI) submitted some paperwork to complete the registration process it started on Aug. 3. SRI has earned a lot of media coverage for a party its size because of its stated intention to nominate Sri Mulyani Indrawati, the former finance minister and World Bank managing director, as its presidential candidate for 2014.

Achmad Gelora, a ministry official, said the National Republic Party (Nasrep), founded by Hutomo “Tommy” Mandala Putra Suharto, the youngest son of the late President Suharto, also registered for the elections.

Other parties of note to register were the National Democratic Party, linked to Golkar executive Surya Paloh, and the United National Party (PPN), founded by the heads of 12 political parties that failed to win seats in the House of Representatives in the 2009 elections.

The Insulinde National Prosperity Party (Partai Kemakmuran Bangsa Nusantara or PKBN), founded by Yenny Wahid, the daughter of the late former President Abdurrahman “Gus Dur” Wahid, appears to be the new name for the faction of the National Awakening Party (PKB) that she has headed for some time.

Yenny said the PKBN had not officially decided on a presidential candidate. She added, however, that “if most of my supporters agree, then Mahfud will be the PKBN’s sole candidate for the presidency.” She was referring to Constitutional Court chairman Muhammad Mahfud.

Other new parties include the Satria Piningit Party (Chosen Knight Party), the Republican Works Party (PAKAR), the Republican Struggle Party, the Independent Party, the One Republic Party, the Indonesian People’s Force Party, the Thoriqot Islam Party and the
Awakening Great Indonesia Party. The 74 existing registered parties did not need to reregister, but will be subject to verification, Sucipto said.

Achmad said verification would start this week and continue until Sept. 22. The names of the parties that passed the verification would be announced about three weeks after that, he said.

Meanwhile, Apung Widadi, a researcher at Indonesia Corruption Watch, said none of the nine parties at the House had submitted their financial statement for an audit by the BPK, the state audit agency.

 

 

 

 

 

 

 

 

 

 Indonesia Digest

 

 Global Digest

 

 

 

 

 

 

 

 

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