Comparisons between how US and Indonesia have dealt with their respective environmental crises are striking
CLEARLY, after the BP oil spill catastrophe in the Gulf of Mexico, it’s beyond preposterous that its gaffe-prone chief executive should be considered for higher public office, or for much longer at BP for that matter.
But cross the globe to Australia’s neighbour, Indonesia, now in its fifth year enduring a larger-scale environmental catastrophe than the muck transforming the coast of Louisiana. It has had a very different way of dealing with its equivalent of Tony Hayward, Aburizal Bakrie.
Widely regarded as Indonesia’s richest man, Bakrie seems to have gone from strength to strength since masses of mud started oozing from his company’s exploded natural gas well at Sidoarjo, near Surabaya in eastern Java, where Australia’s Santos was a joint-venture partner until it managed to prise itself clear.
Indeed, as heir to the former Suharto political fiefdom Golkar, in a political culture where money greases votes and talks very loudly, Bakrie could well become Indonesia’s next president.
The comparisons between how the US and Indonesia have dealt with their respective environmental crises are striking.
Where BP quickly pledged to finance the Deepwater Horizon clean-up and the claims arising from the spill, Bakrie blamed an earthquake for the blowout, as learned scientists disagreed. Where BP slapped down $20 billion for a ”spill response fund”, the Bakrie group packed its Lapindo subsidiary off into in a $2 offshore shelf company, which seemed designed to shield impact on the corporate parent. Where BP suffered a $100 billion slump in its sharemarket value, the Bakrie Group has never stopped deal-making and has suffered no significant corporate effect from the Java spill.
Where Barack Obama wasted no time in savaging BP, a mostly silent President Susilo Bambang Yudhoyono kept Bakrie in his cabinet as Minister for People’s Welfare, with no irony apparently intended. Ten years after the fall of Suharto, Susilo Bambang Yudhoyono still needed Golkar support to rule. Where BP suffers widespread international condemnation and consumer boycotts, the Bakrie Group patron inches ever closer to the presidency, his ambition fuelled by his family’s enormous money trove.
True, Susilo Bambang Yudhoyono asked Bakrie to pay $400 million to compensate the more than 10,000 families effected by the spill. But it is believed that less than 20 per cent has been paid, as blame for the gusher gets deflected. A Bakrie subsidiary got close to collapse in 2008 but that wasn’t because of anything to with ”Lusi” – Bahasa shorthand for the mudflow – it was because it gambled too much with foreign banks as the world financial system was melting down.
Typically, the Bakrie offshoot wriggled clear of that crisis, too, as the patron wriggled into the Golkar chairmanship while claiming, hand on the Koran – and to this correspondent – that he had ”never, ever” done business while in ministerial office. Yes, he had talked to his younger brothers on ”family matters” while praying at the company mosque, but doing business? Never.
These past weeks came another colourful chapter in official Indonesia’s relationship with the Bakrie empire. Shares in several group companies took a sharp tumble when a $300 million discrepancy emerged in the officially filed figures – the ones investors trade from – of Bakrie coalminer Bumi Resources’ dealing with another subsidiary. Oh, that was a formatting problem in a corrupted spreadsheet, claimed Bumi. Duly, the wrong numbers got added to the wrong columns, but thanks for picking it up. It’ll be fixed the next time we report. As Indonesia deals with regulation differently, investing in companies like Bakrie seem to favour those gathering at the exciting end of the market.
The Lusi scandal is again in focus because Indonesia has just signed a landmark environmental deal with Norway. Critics say it boils down to Oslo paying Jakarta more than $1 billion to preserve its rainforests, particularly those in Kalimantan, on the island of Borneo, which is shared by three ASEAN members – Indonesia, Malaysia and Brunei – and in Sumatra. Corporate Indonesia, which fells about a million hectares of forest a year, doesn’t like the Norwegian pact. Conservationists are in two minds, between approval that the deal pledges to preserve forest, and disapproval in that it rewards a country for having destroyed its environment. The Bakrie Group apparently doesn’t like the plan either. It has coalmines in Kalimantan and palm oil plantations in Sumatra.
If Bakrie does get to the Istana Merdeka – the official presidential palace in Jakarta – chances are he’ll be long gone from office by the time Lusi stops flowing. Having already covered 1000 hectares of East Java while oozing out the equivalent of 20 Olympic pools of 140 degree-heated mud a day, scientists say Lusi will continue to gurgle for another 30 years. For supporters of continued Indonesian reform and accountability, the current popular president, Susilo Bambang Yudhoyono, could be as good as it gets.