Borneo Pulp

by John Francis Kinsella

Ennis followed Budiman out to the tee for the first hole. It was early, just after seven to be precise; a slight haze was clearing, burnt off by the already hot sun, giving way to a fine still Saturday morning. Sigit Budiman had invited him to a round of golf at Pondok Indah, a smart golf club on the outskirts of Jakarta, used by wealthy local businessmen, politicians and certain expatriates.

  Out on the course it was a good occasion for them to talk about sensitive matters, without the risk of being overheard, also a means for Ennis of having a good couple or so hours of uninterrupted discussion with Sigit.

  ‘Tell me Sigit, what’s Sutrawan’s background?’

  ‘I know him only by name and reputation, Jani Sutrawan, his Chinese name is Swee Swee Boon or Kim To Boen. He first became known after 1965, with Orde Baru, that’s the New Order year. He’s got several joint-ventures with major Japanese industrial groups.’

  ‘What about forestry or paper?’

  ‘I’m not exactly sure, but Sutrawan is involved in several sectors, timber, plantations, mining, import-export, real-estate and banking business. I understand he’s also President of the Board of Trustees of a Hongkong finance company.’

  ‘So he’s a successful businessman!’

  ‘Sure, he’s also got some good friends at the top including Sudarmono, the Sultan of Johor and he’s also the Chairman of the Indonesian Badminton Association.’

  ‘How did he make it then?’

  ‘Well that’s a long story, but basically it became clear that he was closely linked with military in late sixties. He had the agency for General Motors, but then he lost it for some unclear reason to another Chinese, Sutowo. He was also involved in the clove monopoly, but he also lost that to Liem Sio Liong, I suppose he was backing the wrong general somewhere.’

  ‘What happened then?’

  ‘Well he still has some powerful friends, he built his group on extensive forestry concessions, which had been under the control of the military.’

  ‘The army?’

  ‘Yes, it’s not unusual, you know they have their own resources and businesses, unfortunately they’re not that good in business and they normally tie in with some group to run it for them.’

  ‘That’s normal then?’

  ‘Yes, for example another group owned by Widjaya controls the palm oil industry with Liem Sio Liong, in joint ownership of Bimoli and Sawit Melindo.’

  ‘Widjaya? They’re in forestry and paper too?’

  ‘Yeah, they’re into everything.’

  ‘Oh! I remember now, wasn’t that the Widjaya in the Bank scandal?’

  Budiman laughed.

  ‘I see you’ve been swatting up on the murky financial dealings of the Jakarta business world.’

  Ennis smiled and nodded.

  ‘It wasn’t Widjaya, it goes back a few years, in 1980 the entire board of directors of the Bank Bumi Daya resigned after charges of corruption, credits of over eight hundred million dollars were overdue, and allegations that a former director, illegally provided forty five million dollars to a Chinese businessman, a certain Boen in return for payments.’

  ‘Boen! Didn’t you say that was another name for Sutrawan?’

  ‘Yes, but it was never clearly shown that it was linked to Sutrawan and was quickly hushed up.’

  ‘It’s not surprising, nearly every day there’s accusations of some kind of fraud or misappropriations in state corporations in the Jakarta newspapers.’

  ‘Yeah! Indonesian generals and their Chinese business associates, for example under the patronage of Bulog several private business groups have flourished, they’re mostly Chinese capitalists with long standing connections to Kostrad. It’s a good example of what is called the cukong system, in which Chinese businessmen fulfil the role of financiers to military in return for access to licences, credit monopolies and political protection. That’s exactly what Sutrawan does.’

  ‘Is it good to get involved with him then?’ asked Ennis with a worried look.

  ‘That’s up to you-I mean Brodzski-I wouldn’t recommend it.’

  He swung at the ball and Ennis watched it disappear down the fairway.

  ‘Let’s go,’ said Sigit handing his club to the caddy who followed them.

  ‘There are so many scandals, one of the biggest was the Pertamina affair, the President Director, Ibnu Sutowo, allowed loans to be raised without the authority of the Board of Supervisors. He approved the purchase of tankers from an American ship builder General Dynamics, at a price of 150 million dollars, when the same type of ship was available from Norway at 100 million.

  Time magazine had reported that tanker contracts were padded by as much as forty percent. In addition most oil contracts contained a thirty percent clause providing a substantial private commission for officials of the company.’

  ‘Whilst we’re on that Sigit, what about our arrangements?’

  ‘What do you mean!’ he said with an offended look of surprise at being mixed with such a bag of scandals.

  ‘Well...I mean we should have some contingency plans in the case of accidents.’

  ‘Accidents!’

  ‘Yeah, you know what I mean like when Thahir died.’

  ‘What’s that got to do with us?’

  ‘You know...when he died his widow withdrew forty five million US dollars from his personal account from the Chase Manhattan, and the Hongkong and Shanghai Bank in Singapore.’

  ‘So!’

  ‘She was prevented from withdrawing a further thirty five million by a writ from the Indonesian government.’

  ‘I still can’t see what that has to do with us?’

  ‘Well Thahir’s money was derived from commissions for the Krakatau contract.’

  ‘Thahir was part of a large network including Sutowo, Suharto family, and Liem Sio Liong.’

  ‘We wouldn’t like something like that to happen to us.’

  ‘Don’t worry, we’ll look after that.’

  ‘Sutrawan’s definitely involved with the military. Most important thing in their system is the relationship between the state, the military business and capitalist class, both domestic and international.’

  ‘How does that help?’

  ‘Despite the politically derived resources the military can draw on, the bulk of military businesses remain small, under-capitalised and struggling, generally they only start to prosper after entry into joint-ventures with Chinese or international capitalists.’

  ‘I see.’

  ‘Yes, it’s only the Chinese or foreigners who can provide the capital and management, who can turn these assets into real profits.’

  ‘That’s how Sutrawan works then.’

  ‘Right, and nowhere is this better illustrated than in the forest industry.’

  ‘That’s how it ties in then with his military connections.’

  ‘Yes, the military have been remarkably successful in obtaining logging concessions, their contributions in joint-ventures have been the concessions themselves, in return for a share of the profits generated from their exploitation.’

  ‘What about the restrictions on logging?’

  ‘There’s the problem now! The government has restricted unprocessed log exports and force logging companies into building plywood factories, saw mills, and pulp and paper manufacturing. A lot of logging concessions are idle and others are being forced into amalgamations to raise capital for investments.’

  ‘I see, so that’s why they’re interested in pulp and paper all of a sudden.’

  Sigit laughed, ‘As Antoine would say, you’ve understood everything all in one go.’

  A few days later after relaxing and sunning himself Ennis returned to Paris. He was more than pleased with the results. They had now had made good progress with the Indonesian partners, needed for operating the future mill and marketing its products. Partners who were acknowledged as competent and already established in the pulp and paper industry, who would give added weight and credibility to the project in broader Indonesian government
circles through Sutrawan’s powerful political relations.

  A JOINT-VENTURE