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U.S. President Clinton and Indonesian President Suharto have often
been accused of corruption by their critics, and rightly so. Newly
declassified documents now show that both presidents joined to form an
alliance of global corruption, collusion and nepotism.

According to an October 1998 State Department cable from the U.S.
ambassador to Indonesia, J. Stapleton Roy, Clinton administration
officials met with Indonesian Director General of Electricity Endro
Utomo Notodisoerjo. “Commenting on corruption, collusion and nepotism,”
Roy wrote in the cable, “Endro said that in the past there was no
separation between ‘power’ (not electric but former first family power)
and business. ‘All the IPP’s (independent power producers) have a
relation with power, and it is still going on,’ added Endro.”

On Aug. 19, 1999, the State Department declassified 26 documents on
corruption in American-financed electric power projects inside
Indonesia. In addition, the department also elected to withhold parts of
15 documents and three full documents “in the interest of national
security or foreign relations.” All of the withheld documents concern
U.S.-financed electric power plant projects inside Indonesia.

Another declassified November 1998 State Department cable dedicates
an entire section to “Dealing with Unwanted Partners.” According to the
State Department, U.S. electric power manufacturer El Paso International
entered into the Sengkang power project with Suharto’s second daughter,
“Tutut.” In an effort to deal with the “unwanted” Suharto partner, El
Paso tried to buy Tutut out of the Sengkang project.

    “Tutut holds two and one half percent in PT Triahsra Sarana,
    which has a 5 percent share in PT Energi Sengkang. According to
    Sengkang, Tutut does not intend to divest from the project at this
    time.”

The “Unwanted Partners” section also reveals yet-another
kickback, this time for a Suharto “crony” instead of a relative.

    “Unocal executives told resources officer that the firm is close
    to reaching a deal with its partner, PT Nusamba (controlled by former
    President Soeharto [sic] crony Bob Hasan) to sever ties in two
    production sharing contracts (PSC) in east Kalmantan and East Java.”

Each of the 26 documents has some sort of allegation of corrupt
activities between U.S. power manufacturers and the Suharto government.
In fact, the warnings of corruption came as early
as 1996. In April 1996, Ambassador Barry in Jakarta wrote,

    Java Power Company has obtained a USD 1.7 billion financing
    package for its 2 X 610 coal fired Paiton Swasta II power plant. …
    Java Power Company is 50 percent owned by Siemens Power, 35 percent
    Powergen PLC of the UK and 15 percent by PT Bumiperitwi Tatapradipta.
    The latter is a subsidiary of the Bimantara Group controlled by Bambang
    Trihatmodjo, President Soeharto’s (sic) second son.

However, a bribe for Suharto’s second son was really nothing new
to the Clinton administration in 1996. Previously released documents
from the U.S. Commerce Department clearly show that the crown jewel of
Indonesian power, the Paiton Swasta I project, is actually filled with
Suharto corruption.

The partners in the Paiton I consortium include Edison Mission
Energy, Mitsui & Co. Ltd. of Japan, General Electric Capital Corporation
and PT Batu Hitam Perkasa. PT Batu is owned by Suharto’s youngest
daughter, Titek Prabowo and her brother-in-law, Hashim Djojohadikusumo.

Federal Election Commission records show that Mission Energy CEO John
Bryson donated money to the Clinton-Gore campaign and contributed money
to Clinton’s legal defense fund. Mission
Energy is also a partner of Indonesia’s Lippo Group, a consortium
part-owned by Indonesian billionaire Moctar Riady and the Chinese army
CITIC (China International Trust and Investment
Corporation) bank. Moctar Riady is also accused of illegally donated
money to the Clinton-Gore political campaigns.

Paiton I was billed as the first “private” electric plant in
Indonesia. However, private ownership in Indonesia actually means
privately owned and operated by the Suharto “first family.” The
Indonesian company that owns, operates and fuels the Paiton I plant
under a 30 year, no-cut, contract is PT Batu Hitam Perkasa.

Prawabo’s brother-in-law, Hashim, also received an exclusive, no bid,
no-cut contract to supply coal for the power plant. The State Department
characterized the over-priced coal contract with Hashim as “the Achilles
Heel” of Paiton Swasta I.

According to the Commerce Department, .75 percent 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.

The Commerce documents also state that “Warren Christopher is on
Edison Mission’s board of directors.” The newly declassified State
Department documents highlight that the Paiton I electric project was of
extreme importance to the former member of the Clinton administration.

“Paiton Energy President Ronald Landry provided the IPP’s with an
overview of former Secretary of State Warren Christopher’s visit to
Indonesia,” states a U.S. embassy cable from 1998. “Mr. Christopher,
representing Edison International’s board, was here to launch a
proposal.”

According to Landry, Christopher “spoke on behalf of the IPP’s” when
he said that any solution reached with Indonesia must:

  • “Be a ‘Win-Win’ solution and not ‘embarrass’ Indonesia”

  • “Protect the USG, other government agencies and the financial
    community”

  • “Maintain debt coverage and the sanctity of the contract”

  • “Focus on financial rather than legal issues”

One U.S. agency that will need to be protected is the Overseas
Private Investment Corporation (OPIC). According to a July 1998 State
Department cable written by Ambassador Roy,

    OPIC was concerned that PLN payment problems and inaction on
    suspended IPP projects may result in expropriation claims under OPIC
    political risk insurance polices … OPIC’s combined exposure in
    Indonesia is close to USD 1 billion, or 5 percent of OPIC’s global
    exposure, all in the electric power sector. As such, resolution of
    potential insurance claims and/or actions could result in “an adverse
    material impact” on OPIC finances.

Obviously, if the Indonesian power sector fails then OPIC may
collapse with it. If OPIC failed then it would be audited, along with
the U.S. Export-Import Bank, the World Bank and various other commercial
investors. Thus, the intense fear inside the Clinton-Gore White House is
that the “corruption, collusion and nepotism” will be discovered and
prosecuted.

In 1998, the Indonesian power company, PLN, lost almost a billion
dollars and this year doesn’t look any better. PLN recently announced it
would pay the independent power producers, not in dollars as originally
contracted, but in the poorly valued Indonesian Rupiah. The total amount
of foreign investments sunk into the Indonesian power sector is over $10
billion.

Moreover, the question of whether Indonesia can pay for Clinton and
Suharto corruption is an invalid one. According to the State Department,
“The current selling price is U.S. 2 cents per kwh (kilowatt hour) and
it needs to be increased to U.S. 9 cents per kwh just to break even. …
” (World Bank advisors now estimate that nothing less than a 200 percent
tariff increase is needed)

In addition, there are serious issues to consider other than
corruption, collusion and nepotism, or “KKN,” as Ambassador Roy
abbreviated them. The Dieng Indonesian geothermal project, being
constructed by Calenergy, is also a serious environmental problem.

In July 1998, Calenergy CEO Don O’Shei told State Department
officials that some wells at the “Dieng” geothermal power project “are
temporarily plugged” and “would have to be permanently sealed to prevent
environmental problems.”

Indonesian geothermal power is based on super-heated steam from
volcanic activity underground much like “Old Faithful” in Yellowstone
National Park. The steam is tapped by drilling a series of wells into
the geyser.

However, that steam also contains high amounts of deadly sulfuric
acid, which can pollute the air and water. At the Deing power plant many
of the wells needed to be plugged. The cable also noted that Calenergy
CEO O’Shei said, “this is a costly procedure.”

O’Shei also had a long statement on corruption. Curiously, the State
Department blacked out O’Shei’s comments on “KKN” involving “Calenergy’s
partner in Dieng.” Thus, Calenergy’s information on “KKN” with their
“partner” was withheld for “national security” or “foreign relations”
reasons.

However, documents previously obtained from the U.S. Commerce
Department reveal that “Sigit” Harjojudato, Suharto’s oldest son, was
actually Calenergy’s partner in the Dieng geothermal plant.

In a December 1998 article published in the Wall Street Journal,
Calenergy officials denied they knew that Suharto’s son was their
partner. Yet, O’Shei’s comments on “KKN” with their
“partner” in July 1998, prior to the blanket denial in December 1998,
illustrates that at least the Calenergy CEO was aware of Sigit’s slice
of Dieng.

The documents show that both Indonesia and America have been the
victims of a Clinton sponsored crime wave. The surreal comments on one
“crony” after another becoming “unwanted partners” while doing dirty
deals, were compiled by two U.S. ambassadors to Indonesia: former
Ambassador Barry and Clinton appointee, J. Stapleton Roy.

The State Department documents tell an offensive, scandalous and ugly
story of greed and corruption. They also tell the unvarnished truth, an
accurate self-portrait painted by the Clinton-Gore administration.


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