The Family Firm

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The Suharto reach extended well beyond the foundations' interests, and few deals were more lucrative than the family's oil businesses. In his first decade in power, Suharto allowed state oil conglomerate Pertamina to be run as a private fief by its founder Ibnu Sutowo, a former general once known as the second most powerful man in Indonesia. Sutowo's plan to build a huge tanker fleet for Pertamina brought it to the brink of financial collapse in 1975. He was fired the following year, though it wasn't clear whether the cause was mismanagement or his political ambitions. Now 84, Sutowo tells TIME it was neither. He says Suharto asked him in 1976 to set up a second trading company to ship Indonesian crude oil to Japan. "He said to me, 'I want you to take $0.10 for every barrel traded by the new company,'" Sutowo recalls. "When I said no, I think he was shocked."

After Sutowo was fired, Pertamina eventually imported and exported much of its oil through Perta Oil Marketing and Permindo Oil Trading, two small companies in which Tommy and older brother Bambang acquired significant stakes in the mid-1980s. According to a senior official in Habibie's government, the firms received a commission of $0.30 to $0.35 a barrel. In the 1997-98 fiscal year, the two companies handled an average of 500,000 barrels a day, for yearly commissions of more than $50 million. Says former Mines and Energy Minister Subroto: "Pertamina could have exported directly. There was no need for these companies."

In addition, a former business associate of Tommy and Bambang says there were extra, unofficial markups on oil exports and imports that earned the firms as much as $200 million a year in the 1980s, when prices were high, and about half that in the 1990s. Suharto family companies received Pertamina's contracts for insurance, security, food supplies and other services--a total of 170 contracts in all. Last year, shortly after Suharto's fall, Pertamina canceled many of them and announced instant savings of $99 million a year. Says the former associate of the Suharto scions: "They milked Pertamina like a cow."

One major Suharto money spinner was PT Nusantara Ampera Bakti, or Nusamba, which was launched with $1.5 billion in 1981 by three of the foundations, together with Bob Hasan and Suharto's eldest son Sigit (who held 10% each). The firm became a sprawling conglomerate with more than 30 subsidiaries in finance, energy, pulp and paper, metal and automobiles. Nusamba's jewel was a 4.7% share in Freeport Indonesia, an American-controlled company that runs the world's largest gold mine in the province of Irian Jaya. In 1992 the foundations apparently transferred their 80% share to Hasan, though it is not clear how much he paid for it. So far, government investigators have not asked to see Nusamba's books. Says Otto Cornelis Kaligis, head of Suharto's eight-member legal team: "When you talk about Nusamba you have to ask Bob Hasan. In the investigation of President Suharto, the Attorney General never asked any questions about Nusamba."

The family profited not only by winning concessions from the government but occasionally by disrupting the lives of individual Indonesians who stood in the way. When Suharto wanted to build a cattle ranch getaway in West Java in 1973, he displaced the inhabitants of five villages spread over 751 hectares. According to official records, he paid a total of $5,243 in compensation. Some villagers say they got nothing. Muhammad Hasanuddin, who was a boy at the time, remembers when his family's two-hectare rice farm was lost. "We saw the fat cows, herded by dozens of men pompously riding on horseback, trampling our ruined fields. The whole family could only cry." Hasanuddin's father ended up as a pedicab driver in Jakarta.

Similar stories abound. In 1996, a company owned by Tommy forced villagers off their land in Bali to build a 650-hectare resort. The firm had a permit for only 130 hectares, which it illegally expanded, according to Sonny Qodri, chairman of Bali's Legal Aid Institute. Residents who refused to sign an agreement to sell their land were intimidated, beaten and sometimes put in a pond up to their necks. Two were brought to court and jailed for six months. Nothing remains of the project now: recession hit just as the bulldozers were moving in.

Hasan Basri Durin, chairman of the National Land Agency and Minister of Land Affairs, says the Suharto family typically paid peanuts for the property it acquired--the average was 6% of market value--and reluctant sellers often changed their minds after visits from thugs or soldiers. "Sometimes they didn't pay one cent," says Hasan. "But it's legal because they [the Suhartos] have the documents." Only about half of Indonesia's farmers hold a registered title to their land, so proving ownership can be difficult--and proving intimidation even harder. As a result, few have come forward to complain.

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