Freeport payments to Indonesian military draw official scrutiny

Press Release – 25/01/2006

Global Witness welcomes reports that the authorities in the United States and Indonesia are inquiring into suspicious payments to the Indonesian military and police by Freeport McMoRan Copper & Gold Inc, the US mining company.

Freeport has said that it pays towards “government-provided security” at its mine in Indonesia but refused to say where the money goes. Global Witness revealed in a July 2005 report, “Paying for Protection” that some money appears to have gone directly to Indonesian military and police officers, not to government institutions. A New York Times report, published in December 2005, came to the same conclusion.

Of particular concern are payments, totalling US$247,705 between 2001 and 2003, which appear to have been paid to one of Indonesia’s highest-ranking officers. Major-General Mahidin Simbolon, who has denied receiving payments from Freeport, is currently the Army Inspector-General.

In July 2005, Global Witness called for law enforcement authorities in the United States and Indonesia to investigate whether such payments violate anti-corruption laws. Freeport McMoRan has said its payments comply with applicable laws.

Freeport McMoRan (FCX) said in a US regulatory filing, dated 17th January 2006, that it has “received informal inquiries from governmental agencies related to FCX’s support of Indonesian security institutions.” On 25th January 2006, Indonesian Defence Minister Juwono Sudarsono was quoted by the Dow Jones news agency as saying: “I have asked the inspector general of the defence forces to look into this matter and verify whether these payments have been made.”

Global Witness campaigner Diarmid O’Sullivan said: “We are encouraged that authorities in both countries are looking into these payments. Indonesia is trying to throw off the shackles of corruption and make the military and its finances fully accountable to the democratically-elected government. It is vital that the authorities get to the bottom of Freeport’s financial dealings with the security forces and find out whether or not there have been violations of the law.”

Citizens of resource-rich countries like Indonesia have a right to full information about payments to their governments by extractive companies. Global Witness campaigns for all such payments to be fully disclosed, independently audited and monitored by citizens.

For more information contact Diarmid O’Sullivan or Gavin Hayman at Global Witness on +44 784 305 8756 (cell), +44-207-561-6363 or +44-207-561-6361.

The report itself is available at www.globalwitness.org