Phelim Kyne, Jakarta – Investors in New York have asked US investigators to determine whether millions of dollars allegedly paid by mining giant Freeport to Indonesian military officers in Papua province amounted to bribery.
The custodian of five New York City pension funds has requested that the US Justice Department and the Securities and Exchange Commission investigate possible violations of the US Foreign Practices Act and the Securities and Exchange Act, according to documents obtained by Dow Jones Newswires.
The requests were prompted by reports by The New York Times and environmental group Global Witness that Freeport-McMoRan Copper & Gold Inc paid "large sums" to Indonesian military officers, New York City comptroller William C. Thompson Jr. said in a letter dated Jan. 26 to US Attorney General Alberto Gonzales.
Freeport "had previously claimed that it made payments to reimburse the government for the provision of security services at Freeport's mining operations in West Papua," the letter said.
"While the Foreign Corrupt Practices Act does permit some corporate payments to host countries for such purposes, the large number of payments made directly into the private bank accounts of individual army officers raises serious questions as to whether the statute was violated," the letter said.
The letter says the comptroller is the custodian and investment adviser of the five New York City pension funds, which hold 590,350 shares in Freeport-McMoRan common stock.
"We are concerned that possible illegal actions by company officials could have a negative impact on shareholder value," the letter said.
Freeport has denied breaking any laws either in Indonesia or the United States. The company says it gave "financial support" to Indonesian security officials in Papua for items including infrastructure and logistics, according to a letter from the company's chief executive, Richard Adkerson, posted Jan. 11 on the company Web site.
Thompson's Jan. 26 letter to SEC Chairman Christopher Cox asked for a probe of Freeport-McMoRan's Indonesian military payments to determine if the company violated the SEC's Rule 14a-9 "by making false or misleading statements in its 2004 and 2005 proxy statements."
Last month, the New York Times reported that Freeport-McMoRan made payments of nearly US$20 million (euro16.43 million) to military and police officials posted around the company's massive Grasberg gold mine in remote Papua province from 1998 to 2004.
Those allegations were first disclosed in Global Witness's "Paying for Protection" report in July 2005.
Indonesian Defense Minister Juwono Sudarsono said Wednesday he has ordered an investigation of Freeport-McMoRan's military payments on Papua to determine whether the company broke the law.