The Family Firm

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When the Suharto regime fell, the children used their influence to extricate themselves from ailing businesses and debts. In April 1994, Tommy launched the Goro supermarket chain with two of his companies and the Central Village Cooperative, a large, government-run farmers' organization. Together they borrowed more than $100 million in loans, according to Bank Bumi Daya records. No repayments were ever made on the loans. On May 4, 1998, Tommy sold his shares to the farmers and their cooperative for $112 million in cash, saddling them with the entire debt. "The children were very wild," says Ibnu Hartomo, younger brother of Madam Tien. "It seems that they have forgotten about ethics." Angry mobs burned down one Goro store in south Jakarta during riots in May 1998, a week before Suharto resigned.

Though much of the Suharto fortune has been lost through mismanagement and the country's economic collapse--Tommy's PT Sempati Air, for instance, went bust in 1998--the family still has many viable businesses. One of many small examples: Sigit's PT Panutan Selaras produces 25% of the "premix" high-octane gasoline used in Indonesian cars and owns 22 filling stations in Jakarta, Surabaya and Central Java. Tommy's PT Humpuss Trading, meanwhile, is also producing the high-end gasoline.

And then there's real estate. While prices have plunged in Indonesia, the family's property holdings are today worth $1 billion, and many--including rubber and sugar plantations, malls and hotels--continue to bring in revenue. In the mid-1980s, Bambang paid the government $700 per sq m for a plot of land in central Jakarta on which now sits the Grand Hyatt Hotel, the prime asset of his publicly listed PT Plaza Indonesia Realty. In Bali, the children ended up with some of the most lucrative gems of the tourist industry: Bali Cliff Hotel (Sigit), Sheraton Nusa Indah Resort (Bambang), Sheraton Laguna Nusa Dua (Bambang), Bali Intercontinental Resort (Bambang, until two months ago), Nikko Royal Hotel (Sigit, until six months ago), the Four Seasons Resort in Jimbaran (Tommy) and the Bali Golf and Country Club in Nusa Dua (Tommy). Tutut and Tommy bought the land under Jakarta's National Police Headquarters for a fifth of its market value. Minister of Forestry Muslimin Nasution says 4.5 million hectares of forest and plantation land is connected to the Suharto children. Observes Melbourne-based economist Michael Backman, who has written about the Suhartos in his book Asian Eclipse: Exploring the Dark Side of Business in Asia: "Anyone who says the family businesses are broke has got it wrong. They still have shares in timber, oil palm plantations and hotels, all of which are big dollar earners."


Suharto continues to insist that his assets are modest and located entirely in Indonesia. "He told me, 'I don't have one cent abroad,'" says Kaligis, his top lawyer. "If anyone is found to have set up an account in his name overseas, he has instructed me to launch a lawsuit against them." Since Suharto resigned, son Bambang and his family have been spending time in Los Angeles; Titiek has been in Boston, where her son goes to high school. The rest of the Suhartos live most of the year in Indonesia. Sigit spends hours on his favorite Versace couch (no one else is allowed to sit on it), playing video games and watching tapes of Javanese shadow puppet performances.

But the wheels of justice have barely started moving. Attorney General Ghalib says Suharto has handed over to the government seven foundations with $690 million in assets. Members of Ghalib's own staff, however, say Suharto continues to control those holdings and that the foundations are worth far more than that. Three of the foundations together have an 87% stake in Bank Duta, which had assets of $1 billion in 1990. Yet in investigating the foundations, Ghalib has not gone beyond their printed records, which he has turned over to a state auditing board for analysis. Says Ghalib's predecessor Soedjono: "This investigation isn't going anywhere."

The ongoing reform of Indonesia's banking sector also seems to be helping Suharto family members and associates cover up their debt obligations. Last October, the government announced a plan to merge four state banks--with a total of $11.5 billion in nonperforming loans--into one. The six Suharto children and several companies affiliated with them are listed by the government as owing $800 million in bad debts to the four banks. The amount may well be understated: between them, Bambang and Tommy have $635 million in bad loans from just one of the four, Bank Bumi Daya. An official with the bank says that its accounts were falsely reported to the government, including $172 million lent to Hashim Djojohadikusumo, Titiek's brother-in-law, to buy stock in another bank. Borrowing money to purchase bank shares is illegal in Indonesia. Asked to respond, Hashim's office said he was too busy for an interview. When TIME informed Habibie of the loan, the President immediately began looking into it.

A genuine investigation into the Suharto booty will probably have to await the next government. A parliamentary election scheduled for June 7, to be followed by a presidential vote in November, could change the political equation substantially. Two leading presidential candidates, Amien Rais and Abdurrahman Wahid, say they would order a trial for Suharto, probably followed by a pardon if he returns ill-gotten gains. Megawati Sukarnoputri, daughter of founding President Sukarno and herself a presidential candidate, hasn't made her stand clear. Some analysts think she will leave Suharto alone, out of gratitude for his not imprisoning her father.

The children, however, could be in for rougher treatment. "As long as their father is alive," says a Suharto family friend, "he can probably protect them. After he's gone, they're going to have to run." Three of the six children have homes in the U.S., so prosecutors there could go after them under tough new laws aimed at corruption and money laundering. Bambang, meanwhile, controls two U.S.-listed companies, which could be subject to investigation under the Foreign Corrupt Practices Act.

Suharto himself has at least one strong legal shield: the presidential decrees that laid the foundation for Suharto Inc. Former Finance Minister Mar'ie Muhammad's anti-corruption watchdog, the Indonesian Transparency Society, has labeled as illegal 79 of the 528 such orders issued between 1993 and May 21, 1998. Yet Suharto was careful to have each decree approved by his rubber-stamp parliament, usually at the end of his five-year presidential terms. Moreover, notes Juan Felix Tampubolon, one of Suharto's lawyers, Indonesia has a statute of limitations on most offenses: "For every crime he committed, if any, before 1981, the right to prosecute has expired under the statutory period." For Suharto of Indonesia, that--along with $9 billion in an Austrian bank-- should offer considerable comfort in retirement.

With reporting by Zamira Loebis, Jason Tedjasukmana and Lisa Rose Weaver/Jakarta, Laird Harrison/Los Angeles, Isabella Ng/Hong Kong, Kate Noble/London and other bureaus

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