While Americans suffer through another hot summer, power companies
are struggling to keep up with the demand for electricity. Brown outs,
cut backs and major rate hikes are expected all across America as power
demands reach an all time high.
However, across the Pacific, Indonesians are struggling to pay
American power producers for electricity that is not needed, and which
they cannot afford. According to newly released documents
from the U.S. Commerce Department, 26 U.S.-sponsored electric power
projects are on the block because the Indonesian state power company,
PLN, is bankrupt.
The crown jewel of electricity projects in Indonesia is the huge
Mission Energy/GE PAITON coal-fired electric plant in East Java. In
1994, Mission Energy, part of the California Edison power consortium,
put great faith in the Clinton administration and Ron Brown to reach
Indonesian dictator Suharto. Mission CEO John Bryson even wrote Brown,
thanking him for the overwhelming
efforts from 1994 through 1995 to get the Indonesians to buy their
Paiton was billed as the first “private” electric plant in Indonesia.
However, “private” ownership in Indonesia means owned and operated by
the Suharto “First Family.” The Indonesian company that owns, operates
and fuels the Paiton plant under a 30 year, no cut contract is PT Batu
Perkasa, owned by Suharto’s daughter, Titek Prabowo and her
brother-in-law, Hashim Djojohadikusumo.
According to the Commerce Department, “.75%” of the Paiton project
was reserved for Suharto’s daughter Prabowo. Prabowo’s cut amounted to
an instant $15 million. Her kickback, along with a
cut for “brother-in-law” Hashim and various other Suharto relatives was
provided up front, in cash, in the form of a $50 million loan. The $50
million loan was to be paid back by the profits (dividends) returned
from the $2.6 billion Paiton project.
Since there are no profits, there is no pay back.
According to the 1994 Commerce Department documents, the Asian
Development Bank (ADB) was “skittish” about providing a $50 million
bribe to the Suharto family from the U.S. taxpayers.
The reluctance to participate in an illegal pay-off, led GE and Mission
Energy to seek Clinton help.
“Although the ADB financing is only $50 million, GE views the ADB
component to be important because it has a long-term interest in having
a multinational bank support the project. Furthermore, if ADB rejected
financing, EXIM and the commercial banks involved in the deal would ask
Obviously asking questions would not be good for any project with a
built-in $50 million kickback for the local dictator.
In 1999, the entire $2.6 billion dollar project is on the brink of
failure. The corrupt deals with the former dictator of Indonesia are
collapsing faster than the Indonesian economy. The good citizens of
Indonesia have learned of the “First Family” take-over of their national
resources and they do not
PLN electric officials, fearing for their lives, are pointing fingers
at Suharto. Ex-PLN President Djteng Marsudi has repeatedly stated he was
forced to sign unfairly priced contracts, including Paiton.
In August 1998, the Indonesian melt-down caused Mission Energy to
panic and again seek aid from the Clinton administration. The newly
released documents include a briefing of current Secretary of Commerce
William Daley for a meeting with Mission Energy CEO Edward Muller.
“Mr. Muller will raise his concerns about developments in Asia in
general and about the Paiton project in particular. He will probably
attempt to enlist your support for the Paiton project. Given competing
interest by other U.S. firms, we cannot commit to this particular
Translation: Ron Brown is long dead and Bill Clinton is not anxious
to cuddle up to the Suharto family for fear of raising questions about
donations from Indonesian billionaire Moctar
“Ex-Im (Export Import Bank) is the guarantor for $540 million in the
pre-completion phase. OPIC is the senior lender (provides guarantees for
banks to lend) and insurance provider for the post-completion phase
($200 million). (Mission did not take out political risk insurance from
OPIC or Ex-Im.)”
Translation: Mission Energy’s mistake in not seeking the “political”
insurance was a calculated risk that will cost stock-holders and
customers. Corporate losses overseas will have to be made up with lower
profits at home and higher rates for CalEdison customers.
In fact, according to the Commerce Department, there are U.S.
companies with contracts inside Indonesia who have an interest in the
failure of the Paiton power plant: “Both Ex-Im and OPIC confirmed that
if the 1200 MW Paiton project were to go on line, it would most likely
wipe out any
further GOI (Government of Indonesia) need for other power plants. Thus,
several other major U.S. power developers with other projects, in
varying stages of completion, are potential competitors with Edison for
power purchase agreements.”
Nor does the Commerce Department remove any cloud of scandal from the
Clinton administration. “Warren Christopher is on Edison Mission’s board
of directors,” states the Commerce report.
The 1998 coversheet states quite clearly the Paiton project was of
extreme importance to another former member of the Clinton
administration. During the period of 1994 through 1996, Warren
Christopher, secretary of state, had a vested interest in seeing the
Paiton project to completion.
The connection between Paiton and Moctar Riady, a major figure in the
DNC campaign finance scandals, are clearly documented through PT bank
Lippo. PT Lippo is a partner of First Union
Bank, a major investor in the Paiton project. The leader of the U.S.
project in the Paiton power plant, Mission Energy, is also a partner of
Indonesia’s Lippo Group. The Lippo Group is a consortium, part-owned by
billionaire Moctar Riady.
PT Lippo also provides financing to “brother-in-law” Hashim for his
coal mining company that supplies Paiton. Hashim is himself a key
figure. While serving as the minister for mines under
Suharto, Hashim also managed to purchase the world’s only “low sulfur”
coal mine. His financial backers include Moctar Riady’s PT Lippo and,
his sister-in-law, Prawabo.
Hashim and Moctar Riady both found themselves with a global monopoly
thanks to Bill Clinton’s executive order for the 1.7 million-acre Grand
Staircase-Escalante National Monument in
Utah, over the only other known “low sulfur” deposit.
The connections between Riady and Clinton have a much more sinister
theme than coal monopolies and taxpayer backed power plants in the
middle of Asia. Testimony before Senator Thompson’s committee in 1998
revealed Moctar Riady’s involvement in Chinese espionage.
Testimony revealed the Lippo Group is in fact a joint venture of
China Resources, a trading and holding company “wholly owned” by the
Chinese communist government and used as a front for Chinese espionage
operations. Thus, behind all the front companies, the communist leaders
in Beijing have triumphed again.
Paiton represents the price of electing the morally bankrupt
Clinton-Gore administration. While American’s pay higher rates for
electricity at home, they are also quietly paying for power
plants abroad that will never generate a watt.