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It's Payback Time

Time - June 15, 1998

David Liebhold, Jakarta – If Suharto had hoped that by stepping down he could assuage the anger of the Indonesian people, he is likely to be disappointed. After 32 years of allowing family and friends to squander the public wealth, it's payback time. Jakarta street vendors are selling photocopied lists of companies the Suharto family owns, complete with mug shots of his children. Magazines and newspapers are falling over each other to cater to a public obsessed with unmasking the Suharto fortune. "The people are adamant about it – that wealth has to be returned," says Albert Hasibuan, a lawyer who helped found Citizens Who Care About the National Wealth, an independent group investigating the Suharto assets and gathering evidence for a lawsuit. "The people are poised to take the law into their own hands. It's better for us to start formal legal proceedings."

The strength of the popular outrage about the tainted wealth of the former First Family and their cronies has surprised even many of Suharto's political opponents. Prominent pro-democracy leaders are calling for restraint, arguing that there are more urgent priorities and warning that a witch-hunt could go badly wrong. Even though both democracy icon Megawati Sukarnoputri and popular Muslim leader Amien Rais are appealing for calm, the momentum may be impossible to contain. "Ever since the students brought it up, the issue of the money has been unstoppable," says author and retired Catholic priest Mangun Wijaya. "It's one issue that the people fully understand."

In the face of growing pressure, the government of B.J. Habibie has already announced that it will investigate the proceeds of corruption and nepotism, including, if necessary, the dealings of the Suharto family. At the same time, groups of citizens who doubt the enthusiasm of the attorney general – a Suharto appointee – have launched their own inquiries. Last month, Armed Forces (ABRI) Commander General Wiranto publicly undertook to protect the former President and his family, but he did not make any guarantees about their money. "As far as I'm aware the protection promised was only physical," says Jakarta military analyst Salim Said, who does not expect army leaders to block efforts to recover national assets held by the Suharto family. "I think ABRI should rehabilitate itself and show the people that its leaders are no longer cronies of Suharto." It is hard to imagine a worse turn of events for President Habibie, himself a Suharto protege with no significant independent power base and a reputation for awarding contracts to the dozens of companies controlled by his own family. "Nepotism and corruption are not limited to Suharto," says editor Gunawan Muhamad. "Habibie is also known to be a practitioner of those arts." With little legitimacy to begin with, the new President can hardly be seen to be protecting Suharto from the course of justice. Already last week thousands of students returned to the scene of earlier protests at the parliament building with a banner reading depose habibie! bring suharto to justice!

Together, Suharto and his six children are estimated to be worth as much as $40 billion. The fortune traces to the 1950s, when then-Colonel Suharto began trading and smuggling in cooperation with Liem Sioe Liong, who would become one of the country's wealthiest businessmen. After seizing power in 1966, Suharto established his first company, PT Hanurata Co. Ltd. It still exists, holding an estimated 3,000 sq km of forest concessions, mainly in East Kalimantan. In 1968 Suharto granted lucrative clove import licenses to his half-brother Probosutedjo and Liem, and the following year he gave Liem monopoly rights over wheat milling.

In the early 1970s, under Probosutedjo's direction, Hanurata began importing oil drilling equipment from the United States and Japan. Suharto also set up a sugar mill in southern Sumatra and his wife Tien was involved in arms imports, but neither of these ventures was actually turning a profit. "At the end of the 1970s Suharto didn't have much money," says business consultant Wilson Nababan. "What wealth he did have would mostly have been from commissions and kickbacks." These mostly took the form of price mark-ups on equipment he sold to state companies, adds Nababan. The big money started to accrue in the early 1980s. Three of the Suharto children – Bambang Trihatmodjo, Siti Hardiyanti Rukmana ("Tutut") and Hutomo Mandala Putra ("Tommy") were given lucrative concessions in the petroleum trade, as intermediaries between the state oil monopoly and its customers and suppliers. "That was the money machine," says Nababan. "If you assume 50 cents per barrel per day, that's already about $140 million a year." Last week, under popular pressure, Pertamina announced that it would review these longstanding arrangements.

Since the late 1980s, all six children have broadly diversified, acquiring interests in virtually every sector in which there was money to be made. The list includes aviation, broadcasting, automaking, shipping, sugar, toll roads and telecommunications. As the kids moved into new fields, the blatant favoritism they thrived on became increasingly obvious – and public resentment grew. Yet the former President and his children didn't hold back. One of the family's last and most audacious business schemes was Tommy's "national car program," begun in 1996. It allowed the youngest son to import Kia Sephia sedans from South Korea without paying the 50%-plus import duties and luxury tax to which all other such cars were subject. They were then sold as Timors.

In a measure of how low the Suharto clan has fallen, Minister of Justice Muladi says he is prepared to impose a travel ban on the family if the attorney general requests it. Already the children are said to be on an informal Immigration Ministry blacklist, which would prevent their going abroad. Informed sources say the Suhartos are currently confined to their homes, having been told that the military cannot guarantee their safety if they venture out. It gets worse. Like most Indonesian companies, the Suhartos' ventures have been hit hard by recession and the 80% drop in the rupiah's value. And like so many other Indonesian businessmen, the children were caught out with unhedged foreign-denominated loans. "If Suharto Inc. had to pay all its debts, it would be bankrupt," says Nababan, who estimates that the family's corporate debts alone exceed $6 billion.

Whether or not the children will be brought before the courts on corruption charges will probably depend on how long Indonesia's recession continues. "If the economy gets better, they could escape that," says Sofyan Wanandi, a director of the Center for Strategic and International Studies in Jakarta. "But if the crisis gets worse, a scapegoat will be needed." Assuming they can stay out of jail, the Suhartos have diverted enough wealth overseas that they probably won't ultimately be bankrupted. "They have already built multinational corporations," says George Aditjondro, a sociologist from Australia's University of Newcastle. "The Suhartos were much smarter than the Marcoses or the Mobutus." Tutut has toll-road projects in the Philippines, Tommy owns a major stake in Italy's Lamborghini automaker and Bambang's offshore interests include Singapore-based Osprey Maritime Ltd., one of Asia's largest oil and gas tanker fleets.

The Suharto family has spirited an estimated $1 billion overseas in cash, says Jakarta-based business consultant Christianto Wibisono. "They put it in many different banks in different places – to make it harder to trace and seize," he says. Most of the money is thought to have been stashed in Switzerland, Saudi Arabia and Morocco. "They also have real estate in the US, Britain and New Zealand," says sociologist Aditjondro. Recovering the Suharto billions won't be easy, but Indonesia's campaigners against corruption say there is more at stake than just money. "Even if we don't get a single rupiah, the attempt is important as a form of political education, as well as a means of improving our image abroad," says Hasibuan. With that kind of conviction sweeping the land, Suharto's problems may have only just begun.