Riady scandal won’t scare off US investors

But analysts believe the campaign finance scandal would further fuel bad vibes in Washington about Indonesia and do little to improve shaky ties.

Banking magnate James Riady’s conviction for illegal funding of US politicians will ruffle feathers in the US

Congress and government but is unlikely to scare off American businessmen from Indonesia.

With a new Republican administration at the helm in the United States next week, political observers say that Riady’s campaign finance scandal would further fuel bad vibes in Washington about Indonesia and do little to improve shaky bilateral ties.

Analysts believe that although the conviction could colour perceptions towards Jakarta, the Bush government would have other more immediate concerns to deal with.

But several US Congressmen are expected to go for the jugular.

They might use the Riady saga as fodder to push the government to take a tougher stance towards Jakarta against the backdrop of other thorny problems like East Timor.

Mr Dennis Heffernen, a senior partner with the Jakarta-based US consultancy, Van Zorge and Heffernen, said that some Republicans who had long questioned donations to Mr Clinton’s Democratic Party from people connected to the Lippo Group would want to ensure that the new government keeps it in mind.

He said: “It is going to be on the radar screen for the political elite in Washington. The timing is bad because of a new government coming into power.

He added that some Congressmen might see this as an opportunity to get the new administration to turn the screws on Indonesia, for example, by holding back aid.

“Indonesia will feature in the mind of these Republicans for a while. They are not going to forget what Clinton and Indonesia through Riady did together.”

Others echo these sentiments but argue that those pulling the punches on Indonesia in Congress would not be “a significantly big group”.

Noted an American political analyst: “Clinton is already on his way out. There is no real urge to get him now. Moreover, the Riady scandal was taken over by other more juicy scandals like the Monica Lewinsky affair.”

But he did concede that the Republicans, traditionally said to be close to Indonesia, would be more lukewarm in their response to Jakarta given the fact that an Indonesian billionaire had tried to support the Democrats in an election. “Indonesia really shot itself in the foot because of James Riady,” he said.

“Jakarta does not really have the full Republican backing because that incident will remain etched in their minds. They also can’t turn to the Democrats who seem rather ambivalent towards Indonesia. In fact, Indonesia can’t turn to anyone in Congress for help these days.”

If the political elite in Washington is somewhat affected, the same cannot be said of the American business community. Mr David Chang, President-Director of Vickers Ballas, said that there was little indication that they would be driven away. “I think the big American corporations who do business here know Indonesia well enough to know that there are big differences in moral values between the two countries,” he said.

“The Riady case will have minimal impact on American investor confidence. In fact, the Ajinomoto debacle and closure of the Shangri-La hotel because of strikes will have much more impact on the Americans.”

But he said American businesses with links to the Lippo Group could disengage gradually as they do not want to be linked to a foreign firm found guilty under US laws.

Indeed, Lippo stands to lose a lot given its extensive dealings with US companies, several of whom have opened branches in Jakarta.

These include Toys ‘R’ Us, JCPenney and Arkansas-based Wal-Mart. Lippo will also lose its influence in the White House with Mr Clinton stepping out of office.

For most Indonesians, the Riady scandal does not seem to register any interest.

Some are in fact puzzled that the Americans could have taken influence peddling so seriously.

Noted a senior Indonesian official: “Why are the Americans making such a fuss? One million dollars is a small amount.

“It is so common to give political parties money in Indonesia during election time. I think we live in different planets.”


JAMES Riady of Indonesia, one of Asia’s wealthiest businessmen, is the executive director of the diversified and family-controlled Lippo Group conglomerate, estimated to be worth US$8 billion (S$13.6 billion).

He has the highest profile in the Riady family, which is said to be worth at least US$2 billion. His personal contacts include high-ranking politicians around the world, such as US President Bill Clinton.

The group also owns Lippo Bank, which the US government has accused of knowingly arranging for 86 campaign contributions made in violation of US federal law.

His support for the Democrats might sour Indonesia’s relationship with the Republicans.

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