Tycoons Under Siege
INDONESIA’S MONEY MEN
The ethnic Chinese tycoons who thrived during the Suharto era are down but not out. DERWIN PEREIRA of the Straits Times Indonesia Bureau looks at how these cukongs are adapting to the new political environment and who are next in line to take their place
BOB HASAN once had the ear of the most powerful man in Indonesia.
Today, he is keeping his ear close to the ground in a prison cell, awaiting news of President Abdurrahman Wahid’s downfall – news that could spell freedom for him.
The inmate on the desolate island of Nusakambangan was put behind bars by Mr Abdurrahman for corruption.
In his glory days, Mohamad “Bob” Hasan was trade minister, presidential golfing buddy and a timber tycoon – one of the many cukongs (Indonesian Chinese businessmen with palace links) who prospered under Mr Suharto’s patronage and protection.
For 30 years, sweetheart deals in forestry, mining and infrastructure projects flowed their way.
But the pipeline ran dry following the onset of the Asian financial crisis in the late 1990s and the Indonesian leader’s fall from power soon after.
The withdrawal pains were acute but they were not enough to kill off the cukong influence in the country. With billions of dollars in overseas bank accounts and bourses, they continue to oil the wheels of politics in Indonesia.
As they fight to claw back their assets and breathe life into their dwindling businesses, they have emerged – next to the legislators and the generals – as key players in the evolving power struggle.
The famed Salim Group, for example, had been forced to sell huge chunks of assets to pay the state for funds lent to support its Bank Central Asia.
While haggling with the government over the outstanding amounts, Salim’s Liem Sioe Liong and company have at the same time sought to forge links with Vice-President Megawati Sukarnoputri as an alternative route out of trouble.
Others have done the same, including timber baron Prajogo Pangestu, property developer Ciputra, textile king Marimuthu Srinivasan, and the Gajah Tunggal group’s Sjamsul Nursalim.
Nearly all of these tycoons, who were regulars on Mr Suharto’s invitation list, are on Mr Abdurrahman’s blacklist.
MEGAWATI THE NEXT TARGET
THE President inspired hope 20 months ago when he succeeded the much-maligned B. J. Habibie.
That is no longer the case. With policies increasingly targeting the old Suharto cronies, several of them are placing their bets on Ms Megawati’s ability to restore their former wealth.
Sunday Review understands that they are seeing in her husband, Mr Taufik Kiemas, the perfect conduit to convey their support for her, even as they seek her help and protection.
Mr Taufik, an influential businessman and politician with the Indonesian Democratic Party-Struggle (PDI-P), has emerged over the past year as a key figure in Indonesian politics.
His link with Ms Megawati and his desire to shore up the PDI-P’s power base has made him a prime catch for the cukongs. Despite opposition from within the PDI-P, especially from stalwarts Kwik Kian Gie and Laksamana Sukardi who argue that the party needs to “stay clear of the corrupt past”, sources say that Mr Taufik has had meetings with several businessmen
in recent months.
Acting on the orders of Mr Liem, and through the mediation of PDI-P elder Roy Janis, son Anthony Salim was despatched to see Mr Taufik in May this year to gather intelligence on the state of political play and to pledge support for Ms Megawati. Mr Salim has been engaging in plenty of quiet diplomacy of late. Besides meeting PDI-P elders, he has also been talking to Golkar’s elite, such as Mr Theo Sambuaga and Mr Agung Laksono.
Said a senior member of the PDI-P: “The message to all of us is very clear – that the Salim Group finds it difficult to prosper under the current government, which sees it as a Suharto crony.”
Mr Prajogo and Mr Nursalim, once in Mr Abdurrahman’s good books with favourable debt-restructuring terms, have also sought refuge in Ms Megawati’s camp as things soured.
Mr Prajogo’s links with Mr Abdurrahman did little to ease the pressure from the President’s Nation Awakening Party (PKB) to bring him to book for graft.
So he switched sides, turning to Mr Taufik, elites in Golkar, the United Development Party (PPP) and former army chief General Tyasno for help.
Mr Taufik reportedly told him during a meeting in April this year that he could not guarantee him “permanent amnesty”. Mr Sjamsul Nursalim’s arrest in April over accusations of misappropriation of billions in state bank credits raised all manner of speculation that it was the palace’s way of reminding the tycoons of its power, and that they had better think twice before jumping ship.
The detention came after the PKB got wind of his US$100,000 (S$182,000) funding of Golkar as it pushed for impeachment proceedings against Mr Abdurrahman.
He was detained for a day, and then released on medical grounds. He subsequently left the country for treatment and has yet to return.
For some, like Mr Srinivasan of the Texmaco Group, taking sides with several power brokers is the only way to survive politically.
The textile tycoon admitted as much on the need to be close to the political elite when he told Forum magazine in an interview last year: “Every big organisation must have links to the power centre. We need to have links with people in power.”
He maintains a delicate balancing act between the palace, the PDI-P and Golkar.
A probe into a questionable multi-billion-dollar state loan was ordered shut down last year by Mr Abdurrahman on the grounds that the country could not afford to close down Texmaco, one of its biggest export companies. Still, the ethnic Indian businessman is not taking any chances. He has sent his brother to touch base with Mr Taufik and to pledge support for Ms Megawati if she takes over the presidency.
GUS DUR’S TYCOONS
MR ABDURRAHMAN does have some faithful backers in the business community, albeit an amorphous group in the minority. One person who stands out, however, is Mr Edward Soeriadjaya. In a country well known for its corporate dynasties, he is famous as the scion who broke his family’s bank and cost his family the car company his father founded in 1957, Astra International.
Mr Soeriadjaya blames the Suharto regime for punishing Astra, long known for being independent of the powerful Suharto clan.
Mr Suharto was also reportedly less than appreciative when, in the mid-1990s, his Bank Summa built a network of banks for rural Muslim communities with a powerful cleric called Abdurrahman Wahid.
With Mr Abdurrahman as President now, the fortunes of the Soeriadjaya family are rising from the ashes. Mr Soeriadjaya was reinstated as a board member of the Jakarta International Trade Fair. His father, William, was made chairman.
The younger Mr Soeriadjaya has also returned to the corporate stage as a high-technology entrepreneur planning to build a stable of dot.coms and turning Jakarta’s old airport into Indonesia’s Silicon Valley.
Of course, the family comeback has led to accusations that the Soeriadjayas have become neo-cronies.
Legislators say that palace support from the Soeriadjaya family and Texmaco now pose an effective counterweight to the backing they are getting from the other conglomerates.
Says an influential Golkar legislator: “The next few weeks might see a lot of money changing hands to affect political outcomes.”
For most other businessmen in Indonesia, however, there is little attraction in being drawn into battle between the palace neo-cronies and the tycoons of yesteryear.
Notes Mr Sofjan Wanandi of the Gemala pharmaceutical group: “The ones that are pushing the hardest to change the regime are the ones who are trying to save their companies from total collapse. They are a minority but include some of the biggest players.
“It is very natural for them to want to support someone else when the government has taken over 60-70 per cent of their assets. They want to survive.”
CONCERNED ABOUT BOTTOMLINES
SUNDAY Review spoke to several others who echoed Mr Sofjan’s sentiments.
One Indonesian-Chinese, who runs a successful palm-oil export business despite the political and economic upheavals, has this to say: “Sure, the current government does not inspire much confidence for some who stand to lose a lot if they lose their assets. A few others will not want to rock the boat if they have been receiving special privileges.
“But for most of us, we just don’t care. We are only concerned about our financial bottomlines – not the fear of going to jail.”
The cukongs still have a well-stocked battle chest even if the patronage system is less reliable than in the Suharto years. Gemala Group’s Mr Sofjan reckons that Indonesian businessmen have parked up to US$20 billion in offshore accounts in Australia, Singapore and the United States.
Others estimate that the figure could be as high as US$50 billion.
That financial clout has given Indonesia’s old elite the chance to make a bid for assets they lost to the Indonesian Bank Restructuring Agency (Ibra), the outfit tasked with cleaning up the country’s economy.
Ibra is having a difficult time selling off the assets in the face of opposition from the conglomerates. Last year, for example, bowing to public pressure against Mr Liem’s attempts to buy back assets taken over by the agency, the government blocked him from any more bidding.
But this was not before he repurchased a company called Karimun Granite and a piece of QAF, a Singapore-listed food company that had been handed over to Ibra.
There was widespread speculation that the Salim Group might also be using other companies as fronts to recover its assets.
Bhakti Investama is a case in point. The media went wild after this low-profile Surabaya conglomerate started pouring out millions of dollars to buy Salim’s assets that included Oleochemical and Bentoel.
Salim had to deny allegations that Bhakti was doing its bidding – a point backed by some observers who believe that foreign companies were the ones funding Bhakti.
Still, what prompted such rumours in the first place is the perception that, hobbled as they are, the Salims and other cukongs are not yet a spent force.
THE 70-year-old timber baron was once said to be worth about US$3 billion, with stakes in 300 companies spread through the economy, including forestry, banking, insurance, advertising, paper, copper, oil and the media. Bob Hasan did much of his business with the Suharto family. But his fortunes took a sharp dive after he was charged with corruption last September. The government seized several of his companies and ordered him to pay US$243 million in losses that the country had suffered. He was also put behind bars for six years.
Liem Sioe Liong
CHINA-BORN founder of the Salim group once headed Indonesia’s largest conglomerate with 150,000 employees and annual sales of S$14 billion.
His multi-billion-dollar business empire ranged from the Bank Central Asia (BCA) – which had been the country’s largest bank – to food producer PT Indofood Sukses Makmur and cement producer PT Indocement. The group also expanded its business to the region, including China.
Mr Liem, also known as Sudomo Salim, was for many years listed as one of the world’s richest men.
But after the Asian economic crisis, his listed worth fell from US$4 billion to US$1.7 billion and he owes the state bank up to US$10 billion. He has since retired and is leaving his son Anthony Salim to run the business.
HIS father and uncle moved from Fuzhou, China, to Indonesia in the 1920s and began selling spare parts for bicycles. From those humble beginnings, the family built a collection of companies that include publicly listed Gajah Tunggal, and Indonesia’ oldest private bank, Bank Dagang Nasional Indonesia (BDNI).
Gajah Tunggal was a major local maker of tyres for motorcycles and cars. It also manufactured rubber boots, paints and resins. With the economic crisis, his net worth of US$1.5 billion tumbled dramatically, with some speculatingthat he might have lost his billionaire status. The 59-year-old Sjamsul was charged with graft this year but he conveniently sought medical treatment abroad, and has yet to return.