Suharto Inc.
The Investigation by Time
Today 25 years ago (24 May 1999), Time Asia magazine, as part of Time magazine, published an investigation into the wealth of Indonesia’s Suharto and his children that uncovers a $15 billion fortune in cash, property, art, jewelry, and jets. This long article was written by John Colmey and David Liebhold, and some parts of it mentioned the former president and his family ventures in Bali:
According to data from the National Land Agency and Properti Indonesia magazine, the Suharto family on its own or through corporate entities controls some 3.6 million hectares of real estate in Indonesia, an area larger than Belgium. That includes 100,000 sq m of prime office space in Jakarta and nearly 40% of the entire province of East Timor.
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.
In 1996 Suharto grandson Ari Sigit devised a scheme to sell $0.25 revenue stickers as proof of tax payment for every bottle of beer and alcohol consumed in Indonesia (that business collapsed when producers stopped shipping beer to tourist mecca Bali in protest).
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).
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.
Response from Suharto
Responding to this lengthy article, Suharto considered the following parts of the reporting by Time magazine to be tendentious, insinuative, and provocative:
- On the front cover was printed “SUHARTO INC. How Indonesia’s longtime boss built a family fortune”
- On pages 16 and 17 there are pictures of Suharto is hugging, among other things, a picture of a house
- On page 16 it contains the words “emerged that a staggering sum of money linked to Indonesia had been shifted from a bank in Switzerland to another in Austria, now considered a safer for hush-hush deposits” and is continued on page 17 with the words “Time has learned that $ 9 billion of Suharto money was transferred from Switzerland to nominee bank account in Austria
- On page 19 there are the words “it is very likely that none of the Suharto companies has ever paid more than 10% of its real tax obligations”
Suharto, who has also been accused of widespread human rights abuses, filed a lawsuit to the Jakarta District and later to the High Court, both of which, in 2001, ruled in Time’s favour.
Time said its article was based on four months of reporting across 11 countries that uncovered a complex network of investments, bank transfers, and property holdings of Suharto and his family. And none of the writings about the real estate and hotel assets and were disputed by Suharto and his family.
Final Verdict
In 2007, however, a panel of three Supreme Court judges, including a retired general who rose in the military ranks during Suharto’s administration, overturned the decisions. The ruling ordered Time Inc. Asia and six employees to apologise in leading Indonesian magazines and newspapers as well as Time’s Asian, European, and America editions. Time filed a petition to Indonesia’s Supreme Court in February 2008 to reverse the ruling.
In October 2008, Suharto offered a peek into his thoughts in an interview with a reporter for the magazine Gatra, which is owned by one of his friends. Gatra: “How do you feel when you are accused of corruption?” Suharto laughed and then said: “Let it go. Let them say what they want. It is all empty talk. Let them accuse me. The fact is I have never committed corruption. Then I got one trillion.” One trillion rupiah (or about $106 million at that time’s exchange rate) is the amount the Supreme Court awarded to him in its ruling against Time.
Suharto died in November 2008 after winning this legal dispute. But the story didn’t end there.
In 2009, Indonesia’s Supreme Court overturned this libel ruling, which reversed a decision made in 2007 by a panel of three Indonesian Supreme Court judges. This decision has been viewed as a test case of the country’s legal system and its tolerance of freedom of speech. “We hope that through this decision journalists can be free and comfortable to work in Indonesia,” said Todung Mulya Lubis, a lawyer for Time.
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Similar investigation about the family’s hotel asset was published by the New York Times in January 1998, four months before Suharto’s resignation: ‘The Suharto Billions – A Special Report; For Asian Nation’s First Family, Financial Empire is in Peril’. Written by journalist Philip Shenon, the article was never disputed by Suharto and his family.