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The Suharto clan's arms and aircraft businesses in Europe

George J. Aditjondro - July 10, 1997

[This is an updated and revised version of sections of a paper presented at the Oslo University public seminar on East Timor, Monday, December 9, 1996]

"Britain is the greatest arm smuggler to Indonesia." Leading spokeperson for the diplomatic front of the East Timor resistance Jose Manuel Ramos-Horta, made this statement in Brasilia in November 1996, when he asked Brazil's President Fernando Henrique Cardoso, to act as an envoy in convincing countries like Britain, to turn against Jakarta.

I cannot but fully agree with my old friend, who received the 1996 Nobel Peace Prize, together with his compatriot, Dom Carlos Felipe Ximenes Belo, on the world human rights day, December 10, 1996, which also happened to be the anniversary of Alfred Nobel's death.

As we all know by now, the most controversial aspect about British arm deals with Indonesia, is the sale of 24 Hawk fighter planes to Indonesia. Fourteen have already been delivered to Indonesia, and six of them were displayed to the public during the Armed Forces celebrations in Jakarta, last October.

Hence, in relation to this case, we certainly must applaud "the Liverpool Four," Lotta Kronlid, Andrea Needham, Angela Zelter and Joanna Wilson, who bravely broke into the British Aerospace (BAe) factory in Wharton, Lancashire, causing an estimated 1.5 million pound damage to one of the fighter jets that was to be sold to Indonesia. We also must applaud Justice Wickham and the jury who acquitted the four pro-East Timor activists (Sydney Morning Herald, August 1, 1996; Guardian Weekly, August 11, 1996).

Having said that, I would like to put this Hawks deal in a larger context from a bilateral UK-Indonesia perspective, as well as from a global East Timor diplomacy perspective.

From a bilateral perspective, the Hawks deal is only one aspect of a two billion pound "aid-for-arms diplomacy" between Britain and Indonesia. As exposed in The Observer of November 13, 1994, several large aid projects have been offered by London to Jakarta, in return for secret arms deals with the UK. On the "aid" side, this package include a 16 million pound road beween Jakarta and Bandung, which involves the British construction company Trafalgar House, and a 65 million pound thermal power station in Samarinda, East Kalimantan, which involves the Rolls-Royce Industrial Power Group. It was by far the biggest single British aid project in Indonesia in the last 20 years. It was also no coincidence that Rolls-Royce will also supply the engines of the new Hawks sold by BAe to Indonesia (Durham and O'Shaughnessy, 1994; Durham, 1994; Ellingsen, 1994).

Then, on the "arms" side, this package also includes a batallion of 50 Alvis Scorpion light tanks and Stormer full tracked armoured personell carriers, from the British company, Alvis Vehicles. In addition, the contract also covers the provision of training and spare parts. This deal was released to the media directly by Indonesian Armed Forces commander General Feisal Tanjung on November 19, 1994, when he also announced Indonesia's purchase of the 24 Hawk jets (Kompas, Nov. 21, 1994; Jane's Defense Weekly, March 11, 1995: 6).

We already know, which British companies are benefitting from this "aid-for-arms" deal between Britain and Indonesia. But who are their Indonesian counterparts? Who are the Mark Thatchers of Indonesia, in analogy to the Iraq-gate case? As mentioned in Durham, O'Shaughnessy, and Ellingsen, the 56-km toll road will financially benefit the family of President Suharto. Trafalgar House's partner in this venture is a company owned by Suharto's eldest daughter, Siti Hardiyanti Rukmana, aka Tutut. Tutut, however, had also submitted an offer to the tender of the Samarinda power plant project. As she admitted, she lost the Samarinda project to Rolls-Royce (Forum Keadilan, July 31, 1995: 97).

What was not mentioned in the Forum Keadilan interview was that she basically lost the 60 MW Samarinda project to her younger brother, Hutomo Mandala Putra, aka Tommy Suharto. Because since 1994, one of the companies owned by the 36 years billionaire, PT Mahasarana Buana (Mabua), had already been appointed as Rolls-Royce agent for Indonesia (Warta Ekonomi [WE], Nov. 21, 1994: 69; Business Week, August 19, 1996: 15).

British Aerospace, meanwhile, has also appointed a Suharto family company as the sole agent for its BaE 125-100 executive jets, which costs US$ 14 million each. This company, PT Aero Dwiguna Witama, is owned by Martina Sudwikatmono, a daughter of Suharto's cousin and foster brother, Sudwikatmono together with a son of retired Army General Ibnu Sutowo, Adiguna Sutowo.

Aero Dwiguna is the new backbone of Dwi Golden Graha, one of the many conglomerates owned by the Sudwikatmono family. After becoming the sole distributor of BAe's corporate jets, Dwi Golden Graha, which was initially only involved in supermarkets and cinemas, become the 46-th largest Indonesian conglomerate in 1993, with about US$ 500 million worth in assets. A year before, it only reached the 102nd rank, and a year earlier, it was not on the list of 200 largest Indonesian conglomerates at all (WE, May 3, 1993: 30, 57-58; Eksekutif, Febr. 1994: 38; Economic & Business Review Indonesia [EBRI], April 23, 1994: 10; Swasembada [Swa], Oct. 3-16, 1996: 16).

With his family's businesses so closely associated with Rolls-Royce and British Aerospace, how could Suharto not be a staunch supporter of the two billion pound "aid-for-arms" diplomacy between UK and Indonesia? For Tommy Suharto, who was the late Mrs. Suharto's beloved Benjamin, his Rolls-Royce's agency is indeed a major money maker. Not only the 24 Hawks may constantly need repair and maintenance service from his and his uncle's companies, but also the new N-250 passenger airplanes produced by Indonesia's state aircraft company, IPTN, are using Rolls-Royce engines. In addition, since 1987 Roll-Royce had signed an agreement with IPTN for the overhaul and repair of all the Rolls-Royce Trent engines used by the Airbus A-330 airplanes of the Indonesian flag carrier, Garuda Indonesian Airlines (Swa, Dec, 1991; WE, Jan. 23, 1995).

Meanwhile, another major business partner of BAe is a state-owned company, PT Boma Bisma Indra (BBI), which shares the same boss as IPTN. Apart from heading IPTN and BBI, Research and Technology Minister B.J. Habibie also eight other state companies. BAe's automotive arm, Roover, has commenced cooperation with BBI to produce a low-cost car. This cooperation will be a follow up of an agreement between British Trade Minister Richard Needham and Dr Habibie, to establish a thermo-dynamic laboratory at the Puspitek research centre at Serpong, west of Jakarta, which costed US$ 22 million. The laboratory is expected to help Indonesia develop expertise in the development of piston and turbine gas engines (Indonesia Business Weekly [IBW], March 11, 1994: 18).

Two other business groups closely linked to President Suharto, are also involved in supplying aircraft engines. They are PT Sahuta Ragasitama and PT Tricatra Buana Dirgantara. The first one is a member company of the Salim Group, where the Suharto interests are represented by Sudwikatmono, and the second one is owned by Tutut, and holds the agency for General Electric, General Dynamics fighter jets, Hill Aviation Logistic, KHD Aircraft, and many others, and supplies the need of IPTN, Indonesia's state oil company Pertamina, and the two state-owned airlines, Garuda and Merpati (IBW, May 27, 1994; Forum Keadilan, June 23, 1994: 25; Business Week, August 19, 1996: 18).

This passion of the Suharto family in aircrafts, civilian as well as military, originates from the early New Order years. In the mid 1970s, when the Lockheed scandal broke out in the US Congress, two Indonesian bribery channels were exposed. One channel was a so-called Singapore-based "Widows and Orphans Fund" owned by Indonesian airforce officers, and the other one was PT Bayu Air, a new cargo airline owned by Sigit Harjojudanto, President Suharto's oldest son, which initially hired Indonesian airforce planes with their official logo temporary covered by the company's logo (Sampson, 1991: 213-214; Vriens, 1995; personal investigation).

So, it could be that at this early stage of his presidency, Suharto was already beginning to deprive the Indonesian Air Forces, from a major source of 'extra income' for the Admirals, who had been the 'agents' for Lockheed.

Eventually, in the later years of the New Order, the Suharto family developed numerous joint ventures with official and family business of B.J. Habibie, Suharto's most favorite minister. PT Tricatra Buana Dirgantara is only one of those many joint businesses. For example, Tutut has a joint venture with PT Boma Bisma Indra in a consortium which constructed a new oil transit terminal at the Wayame port in Ambon in the Moluccas. Tommy has a monopoly to export explosives made by PT Dahana, another state company headed by Habibie (Tempo, June 4, 1994; WE, Sept. 12, 1994: 16; Gatra, Oct. 21, 1995).

In fact, one can say that what is good for Suharto's family business, is also good for Habibie's family businesses, due to the numerous overlapping shareholder and management links between companies owned by the Suharto family and the Habibie family. For instance, Habibie's family conglomerate Timsco Group has overlapping shares with Tutut in telecommunication and satelite imagery businesses. PT Suhamthabie Utama, another Habibie family is involved in the Manggarai station mega-project in Jakarta, together with companies owned by Tutut and Tommy (Forum Keadilan, June 23, 1994: 26; Republika, June 24, 1995; Wibisono, 1995).

Tommy and his older brother Bambang Trihatmojo have several other joint ventures with the Habibie family's Timsco Group, such as an industrial estate, property, an aircraft maintenance centre on Batam Island near Singapore, an integrated piggery, crocodile farm, and orchid farm on Bulan Island, near Batam, petrochemical factories in West Java, and natural gas mining on the Natuna Island in the South China Sea (Swa, August 1995: 13, 35, 45; Gatra, Jan. 27, 1996: 79-80; Wibisono, 1995; Smith, 1996).

With so many military and civilian trade links between the Suharto and Habibie families, it is not surprising that President Suharto has appointed Minister Habibie's brother, J.E. ("Fanny") Habibie as Indonesia's envoy in London. In his position as Indonesian ambassador to the United Kingdom and Ireland, Fanny Habibie could thereby support his brother Rudy Habibie's role in promoting the European aircraft industry in Indonesia, and through Indonesia, in the Asia-Pacific region.

From his office in London, Fanny Habibie could also help to oversee the Suharto family's business partner in Ireland, namely the Dublin-based leasing company, Guinnes Peat Aviation (GPA). In 1990, Tommy's private airline, Sempati, had leased Fokker F-100 passenger airplanes from GPA, which come equipped with Rolls-Royce engines. Three more F-100s were delivered by GPA during the next year (Far Eastern Economic Review [FEER], August 23, 1990: 56).

The first family's business with this Irish company seemed to be quite profitable, because Tommy and his brother Bambang also brokered the leasing of numerous other airplanes to Indonesia's state owned airline, Garuda, and its sister company, Merpati. This was initially handled by a consortium, which consisted of GPA (50%), Garuda's subsidiary PT Aerowisata (30%), with Bambang's Bimantara Citra and Tommy's Humpuss Group, each 10%. In 1989, they forged a deal with GPA, worth US$ 60 million, including engines, financed with 20% equity and 80% debt capital (FEER, Sept. 21, 1989: 71-72).

Later on, the Suharto kids brought two other partners (Indra Bakrie and Robby Djohan) into this business, by establishing a separate company, PT Arthasaka Nusaphala. While continuing their arrangements with GPA, they also obtained their airplanes from other sources. At one stage they were contemplating to lease several dozens of new planes to Garuda valued at as much as US$ 3.6 billion. The high rates they charged to Garuda and Merpati had raised the eyebrows of the state companies' directors as well as Indonesian finance minister. However, nobody in Indonesia could challenged them, and each Garuda or Merpati director who objected to the incredible high leasing rates lost their jobs (WE, Jan. 23, 1995: 19, 22-23, Jan. 30, 1996; Sinar, Jan. 21, 1995: 75-76; Bursa, Nov. 13, 1995; Forum Keadilan, Nov. 20, 1995: 36-40; The Australian, Oct. 25, 1996; Pura, 1990a).

On a more higher political level, Margaret Thatcher had also developed a close and mutual friendship with Suharto, whose youngest son, Tommy, also developed a special friendship with the "iron lady"'s only son, Mark Thatcher. Tommy and Mark were both keen motor-racing fans. It is most likely that this friendship is what opened the door for Tommy, and the other Suharto siblings, into the British aircraft and arms industry.

During the peak of Margaret Thatcher's rule, Mark, who was as shrewd in exploiting his mother's political links for his own private business interests as the Suharto siblings, opened a branch of one of his companies, Ameristar, in Jakarta. Being familiar with Saudi Arabia because of their oil businesses in the Middle East, Ameristar became interested in providing charter aircraft to transport Indonesian Muslims on their annual haj pilgrimage to Mecca.

As documented by the authors of a new book on the Thatcher family's wealth, about three to five million people go to Mecca each year, and Indonesia's state airline, Garuda, did not have enough planes to transport the pilgrims. Hence, in 1994 Ameristar negotiated with Garuda to supply the planes to bring all the pilgrims (Halloran and Hollingsworth, 1995: 230-231).

It cannot be proven, yet, that Ameristar actually formed a joint enterprise with Tommy Suharto or his siblings to lease airplanes to Garuda during the haj seasons. But since it is a common secret in the business community in Jakarta that the Suharto siblings were the ones that leased the airplanes to Garuda, to meet the extra need during the haj pilgrimage seasons, it is not unlikely, that Mark Thatcher and Tommy Suharto have been involved in this business.

The first family's aircraft business in the UK and Ireland is actually only one area which has to be overlooked by Ambassador Habibie. Other businesses between the Suharto family and British companies is in the lucrative field of oil and gas mining and consequently, petrochemical production. Suharto's oldest son, Sigit Harjojudanto, is a major partner of British Petroleum Chemical Investments, in a huge polyethyline factory in West Java. PT Petrokimia Nusantara Interindo (Peni), in which BP controls 51% shares, plans to invest US$ 800 million to produce 400,000 tons of poly-ethylene per year (FEER, August 2, 1980; Prospek, Oct. 2, 1993; Asiaweek, April 12, 1996: 38).

BP did not seem to be satisfied with one mega-project. It is also planning to establish another joint venture with a member of Suharto's extended family to build a US$ 220 million poly-propylene plant in Java. This time their partner is Hashim Djojohadikusumo, whose brother, Mayor General Prabowo Subianto, is married to Suharto's second daughter, Titiek Prabowo (Pura, 1993). As if that is not enough, BP has also lobbied to get the contract to operate a US$ 1.8 billion olefin producer, PT Chandra Asri. In this mega-project, Bambang Trihatmojo is one of the main shareholders, together with the timber magnate, Prajogo Pangestu (FEER, March 12, 1992: 45-46).

ALL these business links between the First Family and those British and Irish companies, sanctioned by Westminster, exemplify how Jakarta's official foreign diplomacy has been hijacked by the Suharto family's business interests. In various previous articles, written and published this year, I have already outlined some of those connections in other countries, so I would not repeat them here in detail.

Basically, what has happened is that Suharto's extended family has much more power to set the foreign affairs agenda, than the entire Indonesian diplomatic corps together. Supported by their closest crony, Habibie, other ministers, some governors, and business people with close business affiliations with the First Family, the Suharto clan has overruled the Indonesian armed forces (ABRI) in making decisions concerning most of the arms purchases.

The 'hijacking' of the ABRI generals' source of extra income by the Suharto family, by becoming the brokers or agents of so many Western murder industries, is also an important factor behind some tensions between Suharto and some ABRI factions, concerning the coming political succession and whom Suharto should choose as his running mate, or the next Vice President.

These conflicts, however, have been overcome by Suharto in the past with his cunning business mind: if you cannot fight them, bribe them. Just like Benny Murdani had been politically neutralized by involving his elder brother, Harry Murdani, in a major business enterprise of Anthony Salim (son of Liem Sioe Liong) on Bulan Island, near Singapore, together with Timmy Habibie (youngest brother of Minister Habibie), Indra Rukmana (husband of Tutut, Suharto's eldest daughter) and Tommy Suharto (Soetriyono, n.d., 119, 122; Schwarz, 1990; Wibisono, 1995; Smith, 1996), any potential disloyalties of the ABRI faction, or even higher up, of the Vice President, Tri Sutrisno, to the Suharto clan had been neutralized in the same manner.

Air Force Admiral Abu Hartono, the head of the ABRI faction in the parliament, has two years ago been appointed as president commisioner of one of the Habibie family new conglomerates, Repindo Paca Group. The president director of this conglomerate, Thareq Kemal Habibie, the 30-year old second son of Minister Habibie, is now involved in various lucrative businesses connected with his father's official businesses, such as organizing business exhibitions in Europe and the Indonesian Air Show in Jakarta, last year (Tajuk, August 1996: 51; Repindo Panca Group 1994 Company Profile; other sources).

Meanwhile, Isfan Fajar Satrio, the businessman son of Vice President Tri Sutrisno, has also two years ago been appointed as President Director of a new cement factory on a Moluccan island, owned by the Djajanti Group, the largest Indonesian integrated forestry and fishery conglomerate whose President Commissioner happens to be Sudwikatmono again, who owns 10% stocks of the holding company (Kompas, Nov. 5, 1990; Swa, May 1994: 56; IBW, Dec. 2, 1994).

Therefore, as long as ABRI's top brass are happy to receive such "golden hand shakes" and are satisfied with being political and business satelites of the Suharto clan, Suharto's power might still be unchallenged. Only if some of the top officers become either too greedy or more idealistic, and forge political and economic alliances with broad sections of the Indonesian society (since so many people have actually been marginalized, politically and economically, by the Suharto family), can the power of this oligarchy be undermined.