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In pursuit of Soeharto

Van Zorge Report - December 12, 1998

Since coming to power last May President Habibie has repeatedly promised to investigate the Soeharto family and its cronies on charges of corruption, collusion and nepotism. Frustrated by the clear lack of commitment by Attorney General Andi Ghalib to carry our investigations, student protesters and opposition leaders finally succeeded in pressuring Habibie to order a serious probe. At first, the president seemed intent on moving ahead with the creation of a special independent investigative body whose powers would include, among other things, the right to investigate and freeze assets belonging to the Soeharto's business empire. But at the last hour, the deal was called off. What happened?

When HM Soeharto was president, there were few people who could say they truly understood and knew the man. A brilliant tactician, Soeharto rarely revealed his intentions, even to his closest advisors. Many of his cabinet members looked upon him with awe and fear. Men in power who dared to challenge him, such as Armed Forces Chief Gen. Benny Moerdani, found their careers coming to a quick closure. Scores of prominent dissidents who were openly critical of the regime faced an even uglier fate in Indonesia's gulag unless, of course, they were willing to compromise their ideals in return for financial security. Still, there were some determined and defiant idealists. These were usually the young students who had the courage to fight a losing battle. Unfortunately, they did not enjoy the visibility and hence the protection offered by public opprobrium if something were to happen to them. They simply disappeared.

Soeharto is gone from the center stage of Indonesian politics, but he certainly has not disappeared. More likely, you might find him somewhere behind the curtain. The political culture of the Soeharto era still lives on, as do many of his former cronies now occupying the seats of power in the new government. And although Soeharto himself no longer holds any public office, he still wields considerable influence through money politics. Soeharto can use his sheer wealth to fend off reformist politicians and civil movements, which have been clamoring recently for investigations of the Suharto family.

The reason why Soeharto has managed to remain relatively unscathed in the government investigations on corruption is a simple one: many of the family businesses are tied up in ventures either directly or indirectly linked to members of the Habibie administration. For sure, if the Habibie government were to carry out wide-ranging and politically untainted investigations of the business ventures between the Soeharto family and their cronies, there could erupt an uncontrollable momentum and groundswell of public demand for accountability that, ultimately, might land on the doorstep of Habibie's office.

This fact explains, in part, why Attorney General Andi Ghalib has been limiting his investigations of the Soeharto family wealth to land and cash-holdings in local banks. Since coming to office, Ghalib has acted like a well-rehearsed strip-teaser in uncovering the extent of the Soeharto wealth: bit by bit, at an excruciatingly slow pace. Until now, his office has revealed that the former president's family controls nine million hectares of forest concessions (an area the size of Austria), and that Soeharto holds around US$3 million in local bank accounts.

Not surprisingly, Ghalib's audience remains unimpressed and frustrated. Most Indonesians suspect that the Soeharto family has stashed billions of dollars in foreign bank accounts. Forbes magazine has estimated Soeharto's personal wealth at US$4 billion. And practically the entire country is aware of the huge amount of wealth tied up in Soeharto family businesses – many of which enjoyed (and still enjoy) monopoly licenses and permeate practically every major industrial sector in the economy.

Therein lies Habibie's conundrum. Starting with a deeply personal and political relationship with Soeharto spanning over five decades, Habibie entered the presidency with scant public credibility and doubts about his sincerity for political reform. After adamantly claiming that he is no "photocopy" of the former strongman, Habibie has attempted to prove his democratic stripes by moving ahead with plans to hold open and transparent elections next year. There is little doubt that Habibie has intentions on running in those elections – with the long shadow of Soeharto cast over him, Habibie's only saving gesture with the Indonesian electorate would be to sacrifice his former mentor. Yet, such a grand move could easily spell political suicide for the incumbent, as well.

Besides considerations of realpolitik, perhaps President Habibie has been hesitant to instruct the attorney general's office to move ahead with full-scale investigations due to his feelings of loyalty. Or maybe just plain fear of retribution by an elderly man who has been known to be extremely vengeful. Nonetheless, a little less than two weeks ago it seemed that Habibie was willing to take his chances with fate. After months of mounting student protests demanding that former president Soeharto and his family be brought before a court of justice for a trial on their ill-gotten wealth, followed by a bill passed by the People's Consultative Assembly that former government officials must be investigated for misuse of funds while in office (specifically mentioning Soeharto's name), Habibie felt compelled, finally, to deal a potentially devastating blow to the Soeharto family.

According to several well-placed sources, the Van Zorge Report has learned that the president was ready to move ahead with granting unprecedented powers to an independent commission with a mandate to investigate and order the prosecution of the Soeharto family and cronies. The commission, which was to be headed by the outspoken human rights lawyer and activist Adnan Buyung Nasution, had received the president's agreement in principle that it would be allowed to carry out its duties with the right to conduct its own investigations and interrogations independently of the attorney general's office. Habibie also agreed in principle that the commission was to receive the legal mandate to issue subpoenas ordering parties to provide testimony and documents. Most significantly, Nasution and his commission were to be given the right to order the confiscation of Soeharto family assets and bring charges against Soeharto, his children, and cronies.

Shortly after the president gave his word to Nasution that the commission would be allowed to perform its duties without undue interference from third parties, troubles started. Only one day after Habibie offered his blessings to Nasution, the president's top advisors stepped in and tried to convince the president not to allow the commission to go ahead as planned. It is also apparent that some people inside the Habibie inner-circle were leaking information to the Soeharto family, prompting Soeharto's lawyer to issue threats to the Habibie government that it too would suffer the consequences if the commission were to be given official approval to move ahead. In a signed statement by Yohannes Yacob, Soeharto's lawyer, a thinly veiled threat to the Habibie government was prepared on the same day Habibie met with Nasution: "We need to point out that the probe [if] taken to court will also drag down government officials, ex-officials and all the cronies are also suspected of improper gains through corruption, collusion and nepotism."

After much wavering and a flurry of late-night meetings between Habibie's men with Nasution, the commission was called off, just hours before it was supposed to be announced to the public. In its place, Habibie issued a presidential order to Attorney General Ghalib to pursue the investigations on his own, absent the independent commission.

Since then, Ghalib has issued public statements that he is not afraid of going after Soeharto and his family. Soeharto, in a rare interview with the local press, also seemed to be suddenly content with the latest developments, saying "I am ready to be questioned... I know no citizen can escape the law."

More than likely, Ghalib will now continue his investigations on the Soeharto family with a few 'surprise' findings up his sleeves. His first brave move on the Soehartos since receiving Habibie's marching orders was to announce that the government would not revive the national car project run by Tommy Soeharto, the former president's youngest son. [As a result of the advantages granted to the 'Timor' car project the government stands to lose up to US$500 million in unpaid loans.] Given the extremely depressed auto market in Indonesia, which is not expected to recover in the near future, we doubt that the Soeharto family considers the dismantling of the Timor project as a major loss, but rather as a timely write-off.

In addition, many analysts are expecting the corruption investigations carried out by Ghalib, which supposedly will include probes into cronies of the Soeharto clan, to start targeting non-indigenous Indonesians and businessmen funding opposition politicians. In his first case against an identified crony, Ghalib has zeroed in on Djoko Santoso Moeljono, president director of state-owned Bank Rakyat Indonesia. Well-informed observers say that Mr Santoso has been singled out among other corrupt bank officials for supporting opposition leader Amien Rais.