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September 2, 2002

By Dr. Denise Leith

SYDNEY, Australia (September 2, 2002)---Kelly Kwalik of the OPM has denied that the nationalist group is responsible for the killing and wounding of Freeport employees on the company road from Tembagapura on Saturday.

John Rumbiak, the supervisor of ELS-HAM, who met with Kwalik on August 25, stated in Sydney today that, "Most of the guerrilla leaders throughout the entire province are now in a position of reforming peaceful movement for their political demands."

He, along with many other observers of West Papuan and Indonesian politics, believe that it was TNI who were responsible for the killings of the Freeport employees.

This is not the first time a Freeport employee has been shot and killed on the road leading from Tembagapura. On November 8, 1994 a Papuan flagman working for Freeport, Gordan Rumaropen, was shot dead while driving along the access road. The shooting, which the military and the company blamed on the OPM, saw Freeport requesting a greater military presence in the area and resulted in an expanded military operation, which led to well documented human rights violations against the indigenous peoples living within and around the concession area. However, the shooting has remained a point of some contention.

An employee of a Freeport subcontractor, who was also shot in the same area only minutes after the killing of Mr. Rumaropen, believes he saw who shot at him and also killed Mr. Rumaropen. A short time after hearing the original gunshot this person saw an Indonesian soldier disappear into the bushes and seconds later was shot in the leg himself. He then drove past the area where, unbeknownst to him, Mr. Rumaropen was lying dead. The position, which was usually isolated, was surrounded by Indonesian soldiers. It was, he believes, the Indonesian military who shot him and killed Mr. Rumaropen.

Given the similarities of the two incidents and the recognized modus operandi of TNI was it possible that TNI was responsible for the deaths this weekend, and if so, why would the Indonesian military want to attack Freeport? The general response from those who blame the military has been that TNI is using its usual tactic of manufacturing an 'incident' to justify an increase in its presence and actions against the traditional peoples who have steadfastly maintained their peaceful demands for independence. But could there be another reason?

In response to the meltdown of Enron and WorldCom, and to counter investor anger, the Bush administration pushed a bill through the American Senate and Congress, which demanded greater corporate accountability. Passed into law on July 26, the Corporate Fraud Act required American companies to file certifications by August 14 declaring that their financial accounts were true and accurate. Under this legislation CEOs and chief financial officers are now to be held personally responsible for the accuracy of such disclosures.

For years Freeport has turned a blind eye to the pilfering of Freeport property by the military with such practices generally being considered part of the cost of military protection. In 1991 Emmy Hafild, from the Indonesian environmental non-government organization WALHI, claimed that the military commander of the area boasted to her that Freeport directly supported military operations and helped pay military salaries. A number of reports have also claimed that Freeport pays $11 million dollars annually into a communal fund for the military, which is reputedly topped up on request by negotiation. At the same time it has been claimed that local soldiers are paid a monthly salary bonus, which in 2001 was estimated to be approximately Rp 400,000 (US$ 45.21).

While the Freeport-McMoRan annual reports boasts substantial payments to the traditional landowners by listing the millions it pays towards development, is it fair and reasonable, or even legal, for Freeport to claim kudos for such policies without offsetting this figure with what it may be paying the military: the perpetrator of human rights against the same people the company purports to assist? Moreover, in this new era of corporate responsibility foreshadowed by the Corporate Fraud Law, are such accounting practices legal? Could it be that this new legislation has finally forced Freeport to sever its financially and morally questionable ties with TNI?

Although Freeport has strenuously denied that it pays military wages the readiness of the company's executives to deposit cash into the private bank accounts of the military undermines any such assertion. In response to a telephone call from a man identifying himself as the West Papuan police chief, in February 2001 it was reported that Freeport executive Prihadi Santoso (government and external relations) instructed his secretary to deposit $10,000 into the private bank account as requested. It was only later, when the caller was found to be a hoax, did Prihadi inform Jakarta police of the fraud. Although the incident was reported by the Indonesian press no one seemed to be interested in questioning the appropriateness of a senior Freeport executive paying money directly to someone who identified himself over the phone as an Indonesian police chief -- such payments, it would appear, are common practice.

While in the past Freeport may have been willing to fund the military and turn a blind-eye to its illegal activities, immediately after filing certifications under the Corporate Fraud Law it appears that the company may have changed its corporate policy. While for decades Freeport has allowed the military to pilfer from it, according to Dr. Benny Giay, Rector of Walter College in Jayapura and chairman of the West Papuan Reconciliation Task Force, two weeks ago it was reported in the local newspaper, the Cenderawasih Pos, that Freeport had accused members of the Indonesian military of stealing company property. Moreover, on Saturday, the same day as the killings on the road from Tembagapura, Dr. Giay says he was informed by a Freeport manager that Lexi Linturan (head of Freeport Security), had been threatened several times by TNI over the previous two weeks because he had discontinued some, or all, of the company's payments to this institution. Just over two weeks ago the Corporate Fraud Law came into force.

If this scenario is correct could the military have attacked Freeport employees on Saturday to force the company to resume payments and withdraw its charges against its personnel? This would not be the first time TNI threatened the company by using violence. In March 1996, shortly after the release of the Australian Council For Overseas Aid report, which accused Freeport security, in collusion with the Indonesian military, of killing indigenous people in the company's concession area, the company strenuously denied all involvement and attempted to distance itself from TNI. In response the military took control of, if not orchestrated, violent riots in Timika, which saw the direct targeting of Freeport infrastructure. Endeavoring to formulate another response to what the company had come to see as a troublesome and potentially damaging relationship with TNI, Freeport then offered the institution incentives to choose separation and reform. According to one source the military requested $100 million but settled for $35 million from Freeport with the company agreeing to supply the military with its own transport vehicles, build barracks and help in the construction of its own naval base. By supplying the military with separate infrastructure Freeport hoped to define clear physical parameters between itself and TNI in the eyes of the traditional peoples and its detractors, it also hoped to lessen resentment of the company from within the military.

Could it be that the ramifications of the Corporate Fraud Law forced a change in company policy two weeks ago and did this change lead to the Indonesian military killing Freeport employees on the road from Tembagapura on Saturday? If this is the case what will happen if other American companies operating in Indonesia also decide to take this opportunity to discontinue the burdensome payments to TNI? Moreover, how will the Indonesian military and the regime in Jakarta cope with the loss of corporate funding which helps keep the discredited institution afloat and the disparate Republic together?

'The Politics of Power: Freeport in Suharto's Indonesia,' which describes the complex power relationships between the company, the Jakarta elite, the Indonesian military, the traditional landowners, and non-government human rights and environmental organisations, is due for release by the University of Hawai‘i Press in October 2002.

Dr. Denise Leith Email: [email protected]  Ph: 612 9973 1413 Mobile: 0407 414 254

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