Ghosts in the machine

The second instalment of Indonesia for Sale, a series of in-depth articles on the corruption behind Indonesia’s deforestation and land rights crisis co-produced by Mongabay and The Gecko Project.

Prologue: Jakarta, 2013

 

It was long after the close of business when Indonesia’s highest-ranking judge stepped out of his official residence in Jakarta to greet some guests, one night in October 2013. It had been a busy few months for Akil Mochtar. In his capacity as chief justice of the Constitutional Court, he had been called upon to preside over a flurry of cases brought by candidates who had recently taken part in regional elections. Those who felt they had been cheated out of victory through bribes, vote tampering or any of a number of ruses used to gain an edge in close-fought contests could challenge the result in Akil’s court.

Akil was working late because he had a lucrative side job. By day he fulfilled his official role, running one of the nation’s most trusted institutions while presenting the face of an impartial judge. By night he peddled his verdicts, negotiating with litigants who sought to buy his decisions for cash. Akil had become a part of the corrupt system he was supposed to police.

Waiting for Akil, sitting on a bench next to the manicured bushes on his terrace, was a businessman with four envelopes underneath his shirt stuffed with a total of US$250,000 in U.S. and Singapore dollars. He was accompanied by an austere woman wearing a hijab and spectacles, a member of parliament who had brokered the deal about to go down. But as soon as Akil stepped out of his front door, more than a dozen investigators from Indonesia’s anti-corruption agency, the KPK, swarmed around them, arresting all three.

AKIL MOCHTAR

Those named as suspects by the KPK are perp-walked from its offices in South Jakarta, commonly through a throng of flashing cameras, wearing a distinctive bright-orange vest. The spectacle of the nation’s top judge as a captive of the agency horrified and electrified Indonesia. A religious leader called for him to be crucified; protesters in the Javanese city of Solo cut the fingers off an effigy of Akil and demanded that he be hung from a national monument.

By now, 15 years after Indonesia became a democracy, it was common knowledge that money had taken on a corrupt role in deciding elections. Political parties solicited vast sums just to place candidates on the ballot; voters expected to receive cash handouts from serious candidates. The costs ran into the millions of dollars to run for office in cities, districts and provinces, establishing the principle that only those with the wealthiest backers, and the greatest comfort with the dark arts of “money politics,” could hope to prevail.

Akil’s arrest showed how this unseemly business had infected the highest court in the land, one established to safeguard the foundations of Indonesia’s democracy. Adjudicating election disputes was only a part of its remit, and it had gained popularity for a series of progressive decisions that had demonstrated its integrity and independence. The KPK discovered Akil had made at least US$4 million by allowing candidates from every major region of the country to reverse defeat or uphold victory, perverting both the justice system and democracy in one go. Evidence gathered by the KPK suggested that backroom dealings were routine for both the judge and the politicians who sought to bribe him, as much a part of the cut-and-thrust of an election as a stump speech.

While Akil had been the focal point of its investigation, the KPK began working its way through the politicians caught in its net. The first to go down was Hambit Bintih, who had just won a contentious vote to be re-elected head, or bupati, of Gunung Mas, a remote district on the island of Borneo. The businessman who had brought the cash to Akil had done so on Hambit’s behalf, to secure his victory in the election.

HAMPIT BINTIH

Within hours of the sting outside Akil’s house, KPK agents arrested Hambit in a luxury suite on the 17th floor of a Jakarta hotel, bringing his freedom and political career to an end. He was found with the trappings of wealth that sat uneasily with the modest salary of a district official: Italian designer leather bags, stacks of cash, and a bank savings book in the name of Cornelis Nalau Antun, the businessman he had sent to bribe the judge.

Under the glare of media attention attracted by his role in Akil’s downfall, some details trickled out about Cornelis. He was reportedly the bupati’s nephew and had served as his campaign finance manager. During the ensuing trial, it emerged that Cornelis had not only delivered the cash to Akil but had also been tasked with sourcing it. After Hambit negotiated the price with the judge, Cornelis had asked two friends from their home province of Central Kalimantan, each described in court as an “entrepreneur,” to lend him the money. Each of the men provided the equivalent of US$85,000 in cash. In their testimony, they claimed never to have asked what it was for.

The KPK was too busy following the other leads of bribery out from Akil to push the investigation further. In any case, the charges against Hambit were easily proven through a multitude of text messages exposing his negotiations with the judge, while Cornelis had been caught red-handed. The source of the money was attributed to the largesse of two wealthy men willing to help out a friend, no questions asked. Hambit and Cornelis were sentenced to four and three years in prison respectively. Akil was convicted in a separate trial and sent away for life, bringing the episode to a close. But a deeper story remained untold.

The Gecko Project and Mongabay picked up the investigation where the prosecutors left off. We traced the source of the money back further, to a series of land deals cut in the 19 months leading up to the election. These deals represented an area more than ten times the size of Manhattan, inhabited by thousands of indigenous people and encompassing some of the richest rainforest left on Borneo. As Hambit, Cornelis and Akil began serving their sentences, the palm oil firm on the other side of the land deals remained untouched. It is still destroying forest in Gunung Mas today.

Our investigation, based on interviews with sources close to the deals, KPK prosecutors, court records and company documents, shows the bribery of Akil Mochtar was neither the beginning nor the end of the malady that afflicted Gunung Mas. It was just a glimpse of a much bigger system, that channels natural resources to private companies and dark money into corrupt elections. The story behind the Gunung Mas land deals reveals how this system functions. It shows how the destruction of Indonesia’s environment and the subversion of its democracy are inextricably connected. As campaigns get underway ahead of elections this June, in 171 constituencies across the nation, the system remains intact.

Part 1: ‘It was a political year’

 

FOREST IN GUNUNG MAS, 2014. (PHOTO: ULET IFANSASTI/GREENPEACE)

The night Hambit and Cornelis were arrested, another man from Gunung Mas, Iswan Guna, was traveling home from Jakarta. Iswan had campaigned with Hambit’s defeated rival in the recent election for district chief. A few hours before the KPK sting, he had sat in the witness stand to be questioned by Akil in a hearing on the election dispute. When he stopped for the night in Palangkaraya, the capital of Central Kalimantan province, he learned of the bust via a call from his friends, and then saw it was being covered on national TV. For Iswan, a squat, lively man in his early 40s, the news held special resonance: He had spent the past year locked in a battle with the bupati over the fate of four villages in Gunung Mas, including the one into which he was born.

Iswan’s home village of Tuyun sits on the banks of the Kahayan, a majestic river flowing south from the depths of the Bornean rainforest, through Palangkaraya and onward to the Java Sea.  In 2012, word spread in Tuyun and neighbouring villages that their land was to be annexed by a vast oil palm plantation. The first sign of the plan was the appearance of stakes in their land, placed to delineate the boundaries of the project. Iswan was traveling through when he heard the rumblings of discontent. “It will be the death of us,” he recalled people saying. “It was going to affect everybody.”

Gunung Mas lies in Central Kalimantan, one of five provinces in Indonesian Borneo. It is dominated by the ancient rainforests for which the island is famous, teeming with orangutans, hornbills, clouded leopards and gibbons. Several thousand families live in remote villages clinging to the banks of rivers. In its northernmost reaches begin the mountains that form a spine through the centre of the island. In the foothills lies the site of a historic gathering where, in 1894, hundreds of leaders from across the island agreed to peace among themselves and with the Dutch colonialists. The meeting kindled a sense of shared identity among the linguistically and culturally diverse peoples of Borneo’s interior, under the umbrella name “Dayak”.

GUNUNG MAS LIES IN CENTRAL KALIMANTAN, ONE OF FIVE PROVINCES ON THE INDONESIAN PORTION OF BORNEO

If the 20th century began for the Dayaks with an uneasy truce with the Dutch, it would be defined by an increasingly exploitative relationship with outsiders who sought their resources. The villagers of Gunung Mas made a living through subsistence farming, cultivating fruit trees and rice, tapping rubber and extracting gold from rivers. (The name of the district translates as “Mountain of Gold”). Like most of Indonesia’s indigenous peoples, they governed their territory through unwritten custom. Land belonged collectively to the community, and to past and future generations. The current inhabitants were stewards, who could lend the land to outsiders but never sell it in perpetuity.

These customary rules were recognised in Indonesia’s 1945 Constitution. But they conflicted with a litany of subsequent state laws aimed at increasing the government’s control over resources. In the mid-1960s, the nation fell under the control of a military dictator named Suharto, who used these laws to grant logging licenses to his family and cronies. Under Suharto, Gunung Mas was targeted relentlessly by firms connected to the elite. Resistance, as Dayak forests were increasingly degraded, was stifled by fear of the ruthless regime.

In the early 2000s, after Suharto finally fell, control over land was shifted from Jakarta to district governments headed by bupatis. At the same time, global demand was growing for palm oil, an edible oil used in processed foods, cosmetics and biofuels. Borneo provided perfect conditions for the crop. The newly empowered bupatis were soon courted by wealthy plantation firms, principally from Indonesia and neighbouring Malaysia, that coveted land on which to expand. Within their first terms in office, beginning in 2003, the bupatis ceded millions of hectares to plantation firms, much of it already claimed by indigenous communities.

VILLAGERS BUILDING A BOAT IN GUNUNG MAS, 2017

It soon became clear that the bupatis, wielding similar levels of control over their districts that Suharto had over the nation, were highly susceptible to the allure of corruption. Dozens fell prey to busts by the KPK, principally for taking bribes. But the circumstances under which they had granted huge swaths of the country to private investors went largely unscrutinised.

Hambit Bintih’s path to the bupati’s office began when he escaped the hardships of a life in the forest for the privilege of an education in Palangkaraya. He was born in 1958, into a family of farmers in a village named Tumbang Kajuei. Even today, few from Gunung Mas go beyond a high school education. Hambit attended university, then joined the civil service. By the time the Suharto dictatorship collapsed in 1998, he had risen to become head of the Palangkaraya tax agency. He was an active member of Golkar, the party that had served as Suharto’s electoral vehicle and that would continue to dominate political life in the democratic era.

Hambit’s bureaucratic and political experience positioned him to play a prominent role in his home district. He was selected to serve as vice bupati, in 2003, deputy to an older man named Julius Djudae Anom. The pair took control of a district with barely any infrastructure, little in the way of an economy and a population that had rankled against the iniquities of the Suharto regime. Yet it remained rich in resources: timber, coal, gold and land.

Under Djudae, oil palm expansion was muted, even as plantations began to multiply in the districts south of Gunung Mas. But Hartalib Saleh, a member of Djudae’s re-election campaign team, told us Hambit had been lobbying to allow in more private companies. In 2008 Hambit switched parties to run against Djudae, and narrowly won. Now the fate of the district was in his hands.

•          •          •

By the time the mysterious stakes appeared in Iswan’s home village of Tuyun, in 2012, the fate that befell Indonesians whose land was ceded to plantation firms was well known. Some companies took their land without compensation, suppressing resistance with the help of the police and military. Others promised to provide good jobs and smallholdings, promises that went unfulfilled. Rural citizens found no opportunity for recourse, as the state apparatus was mobilised in service of the private sector. Conflicts were now erupting across the country, pitting communities against companies, the state and each other. Iswan, who had watched a particularly violent dispute on the island of Sumatra unfold on TV, was inspired to launch his own opposition.

ISWAN GUNA AT HIS HOME IN PALANGKARAYA, 2017

After some 300 people from Tuyun and surrounding villages wrote a letter to Hambit objecting to the license that threatened their land, the bupati instructed his deputy, Arton Dohong, to hold a town hall meeting in a schoolhouse near the Kahayan River. The villagers prepared for the event by draping banners across the fronts of their homes. One, for which Iswan took personal credit, depicted children and asked, “What will our grandchildren eat?” “It was very, very affecting for the community,” he said.

Arton arrived at the schoolhouse, where some 150 residents had gathered, with a platoon of police officers. He listened as the people expressed their concerns. But, he told them, the plantation was a government program: it could not be opposed. Then Iswan got a text from one of his coordinators: the police had torn down the banners. “Well, after hearing that, I felt like my blood was trembling,” he recounted.

The meeting descended into shouting, as Iswan took umbrage with what he saw as a suppression of the villagers’ freedom of speech. It broke down without an agreement. But Iswan pledged that if Hambit’s administration did not excise the villages from the plantation, he would stage a mass protest. As Hambit stalled, the villagers soon descended on a local government office. YouTube footage shows them amassed in front of officials and a line of police, as a spokesperson voices their demands through a megaphone.

Tuyun was not the only site of unrest in Gunung Mas that year. Further northwest, in the subdistricts of North Kahayan Hulu and Tewah, nine villages discovered plans for another giant plantation, one that would wedge them into a kilometre-wide sliver of land between it and the Kahayan River. Hundreds more Dayaks amassed outside the district parliament, demanding that the license be revoked.

On the face of it, the communities won their battles. In Tuyun, the company promised in writing not to strong-arm them into selling their farms. In the northwest, Hambit declared their land should be excised from the concession. But as he was publicly entertaining their demands, the bupati issued a separate spate of licenses in secret. These new licenses would affect the very same villages that were right then vigorously opposing plantations, but far more deeply.

Where the first concession in Tuyun began five kilometres from the villages, but in their farmland, a second one swallowed all of their land and the villages themselves. In all, six new licenses, handed out in the last 19 months of Hambit’s term in office, threatened to subsume dozens of villages strung along the Kahayan River and its tributary the Rungan. If developed, they would leave thousands of residents with just a few hundred meters of farmland between their homes and the start of the oil palm.

ONE OF THE FIRST CONCESSIONS HAMBIT ISSUED, IN BLUE, SPARKED PROTESTS FROM NEIGHBOURING VILLAGES. A SUBSEQUENT CONCESSION, IN RED, TOOK UP EVEN MORE OF THEIR LAND.

The people of Tuyun first learned of the new license as they had the one before, when wooden stakes appeared to mark out the boundaries. This time, however, they were found inside the village itself. “That company would finish us,” a farmer named Dagok Numai told us. “Even our homes were gone.”

In total, the licenses Hambit issued in the year and a half before he stood for re-election would more than double the area of land controlled by plantation firms in Gunung Mas. Later, looking back at the events that unfolded, Iswan’s view of Hambit’s motivation was clear. “It was a political year,” he said.

Part 2: ‘They can be like a shadow’

 

JAKARTA SKYLINE (PHOTO: TJAN IWE ON FLICKR)

Under Hambit, the business of government was carried out in a series of high-end hotels and restaurants in Jakarta, the capital of Indonesia, 1,000 kilometres from Gunung Mas. There he would deal personally with investors who sought land in Gunung Mas. In Indonesia’s palm oil boom, district bureaucracies played a cursory role, doing the bidding of bupatis like Hambit who could wield their enormous powers unilaterally.

Those who earned an audience with Hambit first had to pass through a man who acted as his fixer in Jakarta. On condition of anonymity, he spoke to us one evening in the lobby of a hotel. Hambit, he said, had wanted to deal with genuine investors, but had been deluged with “brokers” who only wanted permits in order to sell them to someone else. It was the fixer’s job to screen them out. He would meet them first, before arranging investors regarded as credible to see the bupati.

The fixer described Hambit as a gregarious and humble man. The two had travelled to Germany together during Hambit’s first term, where the bupati had been inspired by the well-paved roads and wind turbines. “His motivation was to make Gunung Mas famous,” the fixer said. “He wanted a better life for Gunung Mas, but it wasn’t easy.”

Though he praised Hambit’s character, the fixer was candid about the system in which he operated. Even genuine investors would make under-the-table payments for the privilege of obtaining a license. The fixer referred to it as a “cycle of evil” between government and investors. But he insisted Hambit had made little profit through this means, as it was swallowed up in other ways. “They say the ghost eats the devil’s money,” he explained, using an Indonesian proverb. “It means money obtained illegally will be taken by others.”

Soliciting bribes in exchange for issuing licenses was a straightforward way for bupatis to make money. But it was also a good way to get arrested by the KPK. Intercepting politicians in the act of receiving cash payments, often through wiretaps and sting operations, was the agency’s bread and butter. This was brought into relief in mid-2012, when a bupati from the island of Sulawesi, Amran Batalipu, was caught accepting 3 billion rupiah, then equivalent to US$300,000, from the subordinates of a businesswoman in return for granting her company an oil palm plantation license. Amran’s undoing was a KPK wiretap. He was jailed for seven-and-a-half years.

A CUP ATTACHED TO A RUBBER TREE COLLECTS LATEX IN GUNUNG MAS. TAPPING RUBBER IS AN IMPORTANT SOURCE OF INCOME FOR THE PEOPLE OF THE DISTRICT.

But some bupatis quickly learned they could make far more money in a way that fell outside the glare of the KPK. Operating without oversight, the bupatis could issue licenses to shell companies set up by their cronies or relatives. Even with just an initial permit, the value of a shell company — existing only on paper, perhaps registered to a residential address — could rocket from zero to millions of dollars. The cronies or relatives, acting as proxies, could in turn sell the company on to a major plantation firm. Yadyn Amin, a KPK prosecutor, told us it would be “suicide” for a bupati to register such a company in their own name. But if the listed owner was someone they could control, the bupati could effectively hold shares off the books. “They can be like a shadow,” he said.

The process provided the corruption — a bupati marshalling state assets for his or her own benefit — with a veneer of legality. It was not inherently illegal to give permits to a family member. Indonesia’s corruption law demanded more: that the licensing process break some other regulation, and that the state incur measurable losses as a result. A suitcase full of cash might take a bupati down. But a wire transfer of millions, via a family member, could be clean.

Jeffrey Winters, a Northwestern University professor who studies oligarchy in Indonesia and elsewhere, told us the “narrow” definition of corruption in Indonesian law creates vast grey areas. “There are thousands of examples like this that are clearly acts of corruption by any global standard, but which Indonesian power-players have managed to isolate in a murky zone of ‘odious but not necessarily illegal’,” he wrote in an email. “This leaves a huge part of the Indonesian patronage game intact and difficult to prosecute. It also means that officials spend a great deal of their time and talent scheming about ways to be wildly corrupt but avoid the specific Indonesian definition of corruption.”

We interviewed staff involved in acquisitions at one of the world’s largest palm oil firms, and due-diligence lawyers from Indonesia and Malaysia. All of them confirmed that buying assets from someone connected closely to a bupati, even a family member, would effectively present no legal risk. That they might be channelling millions of dollars to corrupt politicians was not a concern. Anangga Roosdiono, founder of Roosdiono & Partners, which carries out due diligence for plantation firms, went further. He suggested it would be an advantage. “As long as I know the deal will stay quiet, I will do the deal,” he told us at his office in Jakarta, taking the voice of a prospective buyer. “Because if I know that the bupati is behind this, as long as he is there my whole business will be safe.” Anangga had advised his clients not to do such deals. “But some of our clients still insist,” he said.

In Gunung Mas, millions of dollars from such deals went to the man who would later bribe Akil Mochtar on Hambit’s behalf: Cornelis Nalau Antun.

•          •          •

Cornelis was born in 1973, in a village not far from Hambit’s own. He too had left the interior of Borneo, eventually going to work for mining companies in Jakarta. Television coverage of his trial showed a round-faced man with glasses and a receding hairline. He looked like the manager of a corporate office accidentally parachuted into a major graft case, with a fleshy build that spoke to a life lived away from the forest. By the time the deals went down in Gunung Mas, his home was a lime-green mansion in Palangkaraya, incongruously squeezed behind squat concrete dwellings in a dusty, unpaved corner of the town.

CORNELIS NALAU ANTUN

After the arrest, Arton, the deputy bupati, told reporters in Jakarta that Cornelis was Hambit’s nephew. During his trial, Cornelis testified that he and Hambit had begun to grow close in 2007, when he joined the campaign team for Hambit’s first election. Hambit referred to him affectionately as “Lis,” and the younger man had been at his side through the most critical moments of his political career, performing some of the riskiest roles.

During the corruption trial, Cornelis told the court he had agreed to bribe Akil out of respect for Hambit. But he also said they had formed a pact: Before the end of Hambit’s second term, in the middle of 2018, the outgoing bupati would anoint Cornelis his successor. The payoff was contingent on Hambit winning re-election and consolidating his power, which in turn relied on a flow of money to the campaign. Their bond would course through politics and business, and into the blurred space between the two.

CORNELIS NALAU ANTUN’S HOME IN PALANGKARAYA

At some point, likely midway through Hambit’s first term, he and Cornelis established a plan to exploit the bupati’s control of land, using the kind of scheme that would fly beneath the radar of Indonesia’s enforcement agencies. Two sources—Hambit’s fixer, and another man close to the people involved in the deals—told us the idea came from Hambit, who instructed his protégé to set up shell companies that would serve as vehicles for selling licenses. “Hambit saw the opportunity,” the fixer said. “He asked Cornelis, ‘Make the company with your name and do it.’” Once that was done, according to the second source, Cornelis “knew the permits would be sorted. It was done quickly.”

Cornelis founded his first shell company in April 2011, naming his younger brother Guntur as a minor shareholder. Later that year he formed a partnership with two other men who could provide the skills, experience and contacts he lacked. Elan Gahu, a Dayak from the east of the province, had already served as co-founder and director of a shell company formed in Gunung Mas in 2009. Within a year, it had obtained a license from Hambit and been sold to a Malaysian firm for US$4.6 million. It was precisely the kind of deal Cornelis sought to replicate. An old friend of Elan’s named Edwin Permana, with whom he shared roots in a district east of Gunung Mas, was brought on as the third partner. Together they would incorporate three more shell companies.

Edwin had worked as a land-clearing contractor for oil palm firms in West and Central Kalimantan. He also brought to the table a connection to another Malaysian firm, CB Industrial Product, cash-rich and hungry for land.

•          •          •

CB Industrial Product, or CBIP, had made its first foray into Indonesia’s plantation sector in 2009, two years before Cornelis and his partners came together. It bought an 85 percent share in a company registered in Singapore with a license for 8,000 hectares of forest in Lamandau, a hilly district 170 kilometres west of Gunung Mas. Very quickly it ran into legal trouble.

CBIP was formed in 1980 as an engineering firm, and its core business remained the production of equipment for palm oil factories. Its chairman, Yusof Basiron, is a prominent figure in the world of Malaysian palm oil. He sat on the board of Sime Darby, a multibillion-dollar company part-owned by the Malaysian government. He was also CEO of the Malaysian Palm Oil Council, a state-funded body dedicated to promoting the commodity to the world. It did so in part by brazenly denying the industry’s well-documented role in a litany of social and environmental abuses, including the theft of indigenous lands and the destruction of forests and peat swamps, a key driver of climate change. In a 2010 presentation to industry representatives that was typical of the form, Basiron characterised NGO campaigners highlighting the role of palm oil firms in deforestation as “paid agents” of “EU trade protectionists.”

YUSUF BASIRON USES HIS TWITTER FEED TO RAIL AGAINST CRITICS OF THE PALM OIL INDUSTRY, ON OCCASION USING MISLEADING OR INACCURATE INFORMATION.

Over time, CBIP was drawn toward the lucrative business of developing plantations, first in Malaysian Borneo and later in Indonesia. Soon after acquiring the Lamandau concession, the firm sparked a conflict with Dayaks in the village of Cuhai. The village chief, a diminutive, razor-sharp man in his mid-30s named Darius Pilos Pagi, investigated CBIP’s subsidiary, unearthing evidence he claimed proved it had begun clearing forest without all of the required permits. In 2010, following a request from the Lamandau parliament, the police looked into the case. But their inquiry went nowhere. As the chief continued his own investigation, he found further evidence suggesting why.

Darius obtained documents from a confidential source within the company, suggesting that Iwan Setia Putra, the CBIP subsidiary’s general manager, had sought to bribe the police to kill the investigation. The documents, seen by The Gecko Project and Mongabay, include an internal memo from Putra requesting 400 million rupiah, then equivalent to US$45,000, to “solve the problem” with the police. Bank documents confirm the money was subsequently transferred to him. Two weeks later, the police mothballed the investigation. (Putra declined to answer questions relating to this payment. CBIP declined our requests for an interview.)

A LETTER FROM THE GENERAL MANAGER OF CBIP’S LAMANDAU SUSIDIARY REQUESTING FUNDS TO “SOLVE THE PROBLEM” WITH THE POLICE.

In a letter sent later to enforcement agencies in Jakarta, including the KPK, Darius wrote that CBIP had made his people “beggars in our own home.” He argued there was evidence of a “conspiracy” between CBIP and the Lamandau bupati. But the findings from Darius’ investigation sank without a trace. CBIP suffered no tangible consequences from its brush with the law, and went out in search of yet more land to add to its portfolio.

In early 2011, after CBIP’s legal troubles died down, Edwin Permana began working for CBIP in Lamandau, a contractor with the firm told us. At the same time, Cornelis and Hambit’s scheme in Gunung Mas was germinating. Elan Gahu, Edwin’s old friend with a track record in Gunung Mas, would bring the trio together. Soon, CBIP would be drawn into a far bigger scandal.

•          •          •

By the beginning of 2012, all the pieces were in place. Cornelis and his partners had set up the shell companies, Hambit was ready to issue the licenses and CBIP was prepared to buy them. The partners drew clear roles. Elan would handle administrative duties. Edwin would oversee the logistics of clearing dense rainforests. Cornelis would deal with their political patron.

Over the course of nine months in 2012, Cornelis and his partners sold four shell companies to CBIP. The licenses covered almost 60,000 hectares, enough to make them the largest landowners in the district. The concessions overlapped with Tuyun and dozens of other villages, including those trying to keep plantations at bay. The deals were structured so that the full amount was only payable to Cornelis and his partners once the companies had advanced through the permitting process. But as soon as the deals with CBIP were signed, Hambit pushed them through quickly.

OVER THE COURSE OF NINE MONTHS IN 2012, CORNELIS AND HIS PARTNERS SOLD FOUR SHELL COMPANIES TO CBIP

Done properly, the permitting process can take years. For these companies, Hambit made sure it took a matter of weeks. To do so he had to ignore the fact that environmental impact assessments had not been carried out. That decision meant the affected villagers did not know about the projects for months more and rendered the process illegal. But it also ensured more money flowed before the election.

In the dying days of Hambit’s first term, he would squeeze in one more license, granted to a fifth shell company set up by Cornelis that he would later sell to CBIP as well. By the time the deals were all completed, Cornelis and his partners would make US$9.2 million, simply by shuffling papers between Hambit and CBIP. But they also each retained a small percentage in the shell companies. As paper licenses were transformed into real, sprawling plantations, they would make much more. Within a few years, once the land was all planted, Cornelis’ slim share alone could be worth almost US$20 million.

The partners were proud of their success. They became a tight-knit group, drinking beer together on balmy nights in Palangkaraya. But they remained bound to the bupati who was responsible for their swiftly changed circumstances. And for Hambit, their job was not over.

Part 3: ‘Do we have the money, Lis?’

 

A VILLAGE ON THE KAHAYAN RIVER IN GUNUNG MAS, 2017

As the 2013 election approached, Iswan, who had spurred the protests against Hambit’s permits the year before, was invited to the large, modern home of a young businessman named Jaya Samaya Monong. After some small talk, Jaya told Iswan he planned to enter the race for bupati of Gunung Mas. With a large oil palm estate of his own, and a cousin who was governor of the province, Jaya had both the resources and the connections to mount a credible challenge to the incumbent.

Jaya asked Iswan to join his “success team,” the sprawling network of volunteers who would help wage the campaign. Iswan could offer Jaya the glow of association with a grassroots activist and proven organising skills. In return for his support, Iswan asked that Jaya, should he win, issue no more plantation licenses, and revoke existing ones held by the “naughty companies” imposing their will on Dayak villagers. “These are what we call political commitments,” Iswan recalled Jaya telling him. “Good! I accept the offer.”

But the election would not be fought on the basis of such commitments. By 2013, it was an open secret that campaigns were less a battleground of policy than a competition over who could spend the most money.

The term “money politics” has come to be used in Indonesia as a catch-all for the wide range of dark arts candidates employ to swing elections. This phenomenon is laid out in a book to be released later this year by the social scientists Ward Berenschot and Edward Aspinall, titled Democracy for Sale, in which they describe the “netherworld” of corruption and influence-trading that underpins these contests.

To begin with, candidates bribe the political parties that decide who gets on the ballot. The parties sell their support to the highest bidder, illegally charging millions of dollars in resource-rich districts. The money lines the pockets of party elites. Adnan Topan Husodo, head of the NGO Indonesia Corruption Watch, told us that some candidates sought to buy off all the parties, closing off the contest at this stage.

Once on the ticket, the costs keep stacking up. Candidates stage concerts featuring famous pop singers, the most popular of whom charge tens of thousands of dollars to perform on the campaign trail. They bankroll large success teams that take the message to voters across sprawling constituencies with limited infrastructure. Enlisting the help of local power brokers, such as imams and village chiefs, is key to galvanising voters. These figures expect to receive something in return for their support. Other methods are less subtle and clearly illegal, but ubiquitous.

On election day, the success team distributes cash among voters in an illegal practice known as the “dawn attack.” The aim is not to win the support of voters, but to avoid being ruled out. The perception is that candidates who fail to pay will not be viewed as credible. “You have to do it,” said Alfridel Jinu, a former journalist who was barred from running in the 2013 election on a technicality. “In Gunung Mas, it’s ‘no money, no vote’.”

The cumulative costs of these methods are enormous. A study by the KPK, published in February, placed the cost of winning a race for bupati at a minimum of 60 billion rupiah, more than US$4 million. The more resources a district has to be exploited, the higher it rises. Many hopefuls stake their own fortunes on their chances for victory, or go deep into debt, risking personal ruin. Hospitals set aside extra beds after elections for those overcome by the psychological impact of a failed bid. But few candidates are able to bear the cost alone. Most are driven to forge alliances with wealthy backers. Challengers can promise future access to government contracts or permits. Incumbents can fill the coffers in advance, trading on their power while in office. Whoever wins takes office in hock to private interests.

Some politicians have broken the cycle, turning their back on the need to solicit or spend dark money. They have sought to attract voters through popular policies instead, often explicitly standing on anti-graft platforms. As Berenschot and Aspinall observe, such candidates have found success in urban areas with an educated middle class, an active media and a diversified economy. It is far more difficult to run an honest campaign in places where the economy is concentrated in one industry, such as palm oil or mining, which can adopt an outsized influence over the political scene. In such places the “embrace between business and politics is most intense,” shaping the emergence of what the authors call “mafia coalitions.”

In Hambit’s case, an entrepreneur now connected to the palm oil industry stood at the heart of his success team. He appointed Cornelis, who now sat atop a fortune in the wake of the CBIP deals, as his campaign treasurer. Their spending power was visible for all to see. They flew Mulan Jameela, a member of one of Indonesia’s best-known musical duos, to Gunung Mas for a concert. They marshalled the backing of seven political parties. But the full extent of their spending prowess would not emerge until after the votes were counted.

•          •          •

The election took place on September 4, 2013. A week later Hambit was declared the winner, with a shade over half the vote. Jaya, languishing in second place with 39 percent, announced he would challenge the result at the Constitutional Court. His lawsuit, filed later that month, described “fraud that was structured, massive, systematic and very influential” on the part of Hambit’s campaign.

Hambit’s success team was alleged to have offered voters up to 300,000 rupiah, then equivalent to US$26, for every ballot cast in his favour. In a district with some 60,000 voters, such largesse could have cost him more than US$1.5 million. He was also accused of abusing his power over the state apparatus to secure his victory. Jaya claimed that voter cards had not been distributed to all villages, that hundreds of fictional voters had been created, that hundreds of legitimate voters had been expunged from the rolls, and that the organising committee had handed out additional ballots so that their supporters could vote more than once.

Even before the vote, Hambit was approached by an acquaintance offering a connection to Akil Mochtar in the event of a legal challenge to the election, which would place the decision over the result in the judge’s hands. That year had already seen dozens of disputed elections, and a small coterie of individuals, it would later emerge, were peddling access to Akil. Hambit eventually got to him via Chairun Nisa, a national lawmaker whose austere appearance and advocacy for religious interests belied her role in the coming scandal.

The records from Hambit and Cornelis’ corruption trial would reveal how democracy was casually traded in the month between election day and the sting outside Akil’s house. The negotiations between Hambit and Akil, with Nisa as the judge’s proxy, took place in five-star hotels and via text message, with billions of rupiah referred to as “tons of gold”.

TEXT MESSAGES BETWEEN AKIL MOCHTAR AND CHAIRUN NISA, AS SHE BROKERED THE BRIBE BETWEEN THE JUDGE AND HAMBIT BINTIH. (SOURCE: COURT RECORDS)

Akil’s misplaced sense of immunity to justice was clear when he received Hambit at his official residence, as their corrupt flirtation began. According to Hambit’s testimony, the judge had reassured him that the use of money in politics was normal, and had quipped he had met a mayor just the day before for the same purpose.

The talks culminated in a meeting between Chairun Nisa and Hambit in a lounge on the 18th floor of the luxury Hotel Borobudur in Jakarta. Nisa was joined by her husband, Hambit by Cornelis. As they talked, Nisa fired off texts to the judge conveying Hambit’s attempts to lower the price. It was eventually set at 3 billion rupiah, around $260,000.

TEXT MESSAGES BEWTEEN AKIL MOCHTAR AND CHAIRUN NISA AS SHE SAT WITH HAMBIT AND CORNELIS IN THE HOTEL BOROBUDUR, FINALISING THE DEAL. (SOURCE: COURT RECORDS)

Nisa showed Hambit her final text from Akil. “It’s a fixed price,” it read. Hambit turned to his campaign treasurer. “Do we have the money, Lis?”

“I will work on it, uncle,” Cornelis replied.

Cornelis went straight to his partners in the CBIP deals: Edwin and Elan. Four days after the meeting in the Jakarta hotel, Elan was playing badminton outside Cornelis’ house in Palangkaraya when his host asked to “borrow” a third of the money. Elan rushed it to him within a day. Edwin, who was then on the resort island of Bali, received the same request via phone and arranged for a mutual acquaintance to deliver the money to his partner. Cornelis provided the final third of the money himself.

Edwin and Elan would later plead ignorance, each claiming during the trial they had neither known nor asked why their partner needed a fortune, in cash, within a day. “He often borrowed and I never had a problem because it was always returned,” Elan testified. “Nor did I ask for a receipt because of the trust and friendship between us as entrepreneurs.”

The KPK prosecutors were sceptical of the notion that the money had been given as a loan, rather than as part of some reciprocal transaction. “No one would provide that kind of money free of charge,” senior prosecutor Pulung Rinandoro, who worked on the case, told us in an interview at KPK headquarters this February. “They must have had a personal interest.” If it had been determined that the money was a payoff, and not a loan, it could have taken the KPK further, asking what Edwin and Elan had got in return. That, in turn, could have led to the licenses and brought the vast concessions now in the hands of CBIP into its scope. The expedited permits, Cornelis’ connection to Hambit and his role in the deals would have raised further red flags.

THE FLOW OF ASSETS THAT CONNECT THE PLAYERS IN THE GUNUNG MAS LICENSING SCHEME TO THE BRIBERY OF AKIL MOCHTAR

But the source of the cash, Pulung said, was beyond the scope of the bribery investigation. The agency already had enough evidence to convict Akil, its main target, as well as Hambit and Cornelis. Meanwhile, its hands were full trying to determine how many other politicians had bribed the judge. There was neither the time nor an obvious reason to press deeper into Gunung Mas. The trail ended with Edwin and Elan, and the land deals remained undiscovered. CBIP’s assets remained intact. (Edwin and Elan did not respond to requests for comment on this article).

Hambit’s opponents assumed his election win would be voided after he and Akil were arrested. But deliberations over the disputed result went ahead in the Constitutional Court, without Akil. A week after the arrest, the remaining judges held that Jaya had not proven his case, upholding Hambit’s victory. With Hambit languishing behind bars, Arton, his running mate and one-time deputy, was inaugurated as bupati.

TIMELINE FROM ELECTION DAY TO THE CONVICTION OF HAMBIT AND CORNELIS. CBIP’S BUSINESS WITH CORNELIS CONTINUED AFTER HIS IMPRISONMENT.

In the end, Hambit and Cornelis received a lenient verdict. Though the evidence of bribery was irrefutable, the court treated Hambit as Akil’s victim, a legitimate winner who had been extorted by the judge. Cornelis was presented as an unwitting dupe, drawn astray through loyalty to his mentor. Hambit got four years’ imprisonment, Cornelis three, in each case less than the prosecutors requested. A mitigating factor, the court decided, was that the bupati had shown “considerable merit” in bringing development to his district.

Looking back on 2013, in his introduction to CBIP’s annual report, chairman Yusof Basiron described it as “a stellar year”.

Part 4: ‘It was our only treasure’

 

DEFORESTATION IN ONE OF CBIP’S CONCESSIONS IN GUNUNG MAS, 2017

One bright, clear day in 2017, we met a Dayak in his mid-30s named Kusmawanson, as he returned to his village, Tumbang Marikoi, in Gunung Mas. He had spent the morning in the forest, tending to fruit trees planted by his ancestors. Kusmawanson was in low spirits. A troop of monkeys had gorged on his fruit. Such incidents were becoming more frequent, as wildlife fled from the forest being cleared for palm oil.

Tumbang Marikoi was among the nine villages in the northwest of the district that had protested against one of Hambit’s first plantation licenses, issued in 2010. Elan Gahu, Cornelis’ business partner, had acted as a broker in that deal, helping set up the shell company that acquired the license before selling it on to another Malaysian firm, in a precursor to the CBIP deals.

To quell the opposition, Hambit had issued a decree instructing the company to remove the villager’s forest farms from the concession. He prohibited the company from buying land from the villagers without the permission of the district government. The following year the provincial governor instructed the company to aid the process by mapping out the villagers’ customary land.

The instructions were effectively ignored. Customary lands were never properly mapped and identified; the company only logged the claims of individuals willing to sell. The complexities of communal land ownership and decision-making were cast aside. Lands owned by the whole community were instead diced up and sold off for the benefit of whoever made the first claim, using maps and contracts drafted by the company. A customary leader told us he was offered a bribe to certify false claims. Villagers who continued to oppose the plantation told us that their forest farms went unmapped, leaving them vulnerable to others who sought to sell it.

ERMA KUSMINI WITH A PHOTO OF THE LAND ONCE OCCUPIED BY HER FAMILY’S FOREST FARM, NOW DESTROYED

A woman named Erma Kusmini told us that one day in 2016, she went to tend her family’s plot of rubber trees, in the forest around Tumbang Marikoi, only to find it had been destroyed. Another villager had staked a false claim and sold it to the company. Erma’s family had earned a decent living from tapping rubber. With that income now gone, she and her husband had resorted to selling rice at the local schoolhouse, and the uncertain business of extracting gold from rivers. “Maybe we would have sold it eventually, after our children had finished school or if we didn’t have any choice,” she told us. “But that rubber plot was our only treasure.”

Few community members, Kusmawanson told us, sought work with the company because the day rate of 80,000 rupiah, about US$6, was too little to buy food and put their children through school. The jobs were filled largely by landless, impoverished migrants from other islands. But the Dayaks’ own access to land, on which they could grow food or cash crops, was increasingly restricted by the plantation. “We can’t go there because it belongs to the company now,” Kusmawanson said. “We’re facing poverty.”

KARDIE, HEAD OF TUMBANG PAJENGEI VILLAGE IN GUNUNG MAS

The same process had begun in the villages already targeted by CBIP. When Kardie, a stoic man in his early 40s, was chosen to lead a village named Tumbang Pajangei in 2016, he discovered most of its land had been quietly carved up and sold to the Malaysian firm. The deals had been cut by individuals, signed off by his predecessor. It took him by surprise because just one year earlier, in a meeting with the company, the community had rejected the proposed plantation . Many feared it would pollute their supply of clean water and were suspicious of the ambiguity surrounding the benefits promised to them.

By 2017, the forest and farms around Tumbang Pajangei were largely gone, replaced by a denuded yellow landscape pockmarked with young oil palms. The earlier fears proved to be well-founded. Kardie took us on a tour of the streams that flowed into his village. One, he said, used to be so clear that people would travel from surrounding villages to bathe in it. Now the river was stagnant and yellow-brown, silted by mud unleashed when the forest was felled.

MARYIADY, A PRIEST ASSIGNED TO GUNUNG MAS. HE INVESTIGATED THE COMPENSATION CBIP PAID TO FARMERS AND DESCRIBED IT AS “MURDER”.

Those whose land fell within CBIP’s licenses were offered as little as 4 million rupiah, about US$300, per hectare, a pittance for a plot that could feed a family. Mariyady, a local priest who investigated the deals, described the prices as “murder.” “They’re being duped,” he told us. “The bupati knows, the head of the subdistrict knows. But where are their voices? Why are the people being duped?”

In village after village where Hambit’s licenses crashed into customary land claims, the same thing had occurred. Resistance to plantations was quickly eroded. “Almost all of them are opposed,” said Yanedi Jagau, a Dayak from Gunung Mas who directs an NGO that helped augment the farmers’ income through tree-planting programs. “But they can’t speak loudly because there’s no institutions there that are strong enough. It doesn’t mean they agree. Maybe it’s more like anarchy.”

The cumulative effect was a wholesale transition of indigenous territory to private companies. If the licenses remain in place, the people of Gunung Mas will lose their rights to the land for at least 35 years, the lifespan of a plantation license. In that time, the district will be radically transformed. The vestiges of Dayak livelihoods and the last lowland rainforests in Gunung Mas will disappear. In return, the farmers will receive perhaps a few hundred dollars each, and the uncertain hope that some of the vast wealth generated for the owners of the plantations will trickle down to them.

Six years on from the issuance of the licenses, this process is still just beginning. Much of the forest has yet to be cleared. But satellite images reveal that CBIP is now penetrating the most northerly lowland forests in the province, including the foothills where the 1894 meeting of Dayak leaders took place.

FOREST CLEARANCE CARRIED OUT BY CBIP AROUND TUMBANG ANOI, SITE OF THE FAMOUS 1894 PEACE MEETING, AS OF DECEMBER 2017. (SOURCE: SENTINEL HUB, ACCESSED VIA GLOBAL FOREST WATCH)

Iswan’s home village of Tuyun is still awaiting the arrival of the bulldozers. In 2016, CBIP sold a majority stake in three of the companies it bought from Cornelis and his partners, including the one that threatens Tuyun, to a businessman from South Kalimantan named Andi Syamsuddin Arsyad.

Known as Haji Isam, he rose from motorcycle-taxi driver to coal magnate. Tempo, Indonesia’s leading investigative media outlet, has repeatedly covered his links to the police and the frequency with which his business rivals are jailed, their assets reassigned to Isam. The magazine reported that in his home district, Isam is regarded as “untouchable.”

The fate of thousands of villagers now lies in his hands. But the villagers of Tuyun knew nothing of the way their land had been traded. The only clue was a new set of stakes that, like before, appeared to mark out the boundaries of the plantation.

•          •          •

The Akil Mochtar scandal failed to suppress the illicit influence of money in Indonesian elections. Informed observers suggested that the 2014 legislative elections, which took place between his arrest and conviction, were the worst yet. A coordinator for Indonesia Corruption Watch, which monitored contests across the country, described them as “brutal and shambolic,” and said the scale of fraud had increased fourfold since 2009.

“In the weeks that followed the poll,” write the editors of the 2016 book “Electoral Dynamics in Indonesia: Money Politics, Patronage and Clientelism at the Grassroots,” “the consensus view that developed in the media was that candidates had distributed cash payments to voters, handed out goods, and bribed…officials at levels that had never previously been seen in Indonesia’s electoral history.” One renowned politician who lost bemoaned the fact that she had not paid voters.

A recent KPK study emphasised the other side of the coin: the corruptive influence of the source of the money. The anti-graft agency interviewed 450 out of almost 800 candidate pairs that took part in the 2015 regional elections. Two-thirds reported that the donors who financed their campaigns demanded something in return: government contracts, jobs, policy influence and, above all, business licenses. “Something awkward happens in every political cycle,” Jimly Asshiddique, the inaugural chief justice of the Constitutional Court, who chaired the body overseeing Indonesia’s elections until 2017, told us in an interview in the restaurant of a Jakarta hotel. “They always try to issue more licenses in the election period.

The practice of mass vote-buying has its roots in a shift in Indonesia’s electoral system that took place in 2005. Before this point, regional leaders were selected by local legislatures, but in 2005 the decision was passed to voters. Where candidates had previously bought the endorsements of the political elites holding local parliament seats, they now shifted their attention, and money, to the populace. Candidates in the 2014 elections, interviewed for “Electoral Dynamics,” consistently pointed to the first election for a bupati, mayor or governor in their region, from 2005 onwards, as the point at which “mass vote buying had become part of the local political repertoire”.

That same year, the bupatis collectively embarked on a massive plantation licensing spree. After 2005, the rate of plantation expansion in Kalimantan increased almost fourfold, to more than 375,000 hectares each year. The bupatis had been granted control over licensing in 2003. But the real palm oil boom correlates with the point at which money politics began to spiral out of control.

A growing body of evidence suggests this is more than a correlation. Hambit Bintih was far from alone in exploiting his control of land, either for personal gain or to bankroll an election. The first installment of Indonesia for Sale detailed a similar scheme involving permits and shell companies that turned Seruyan, another district in Borneo, into a sea of oil palm. Other bupatis have fallen prey to the KPK for accepting bribes for issuing licenses. Yet more have been jailed for unrelated graft scandals, that took place while they were greenlighting huge plantation projects exhibiting all the hallmarks of a corrupt licensing scheme.

In the years since the genesis of the palm oil boom and money politics, corporations have amassed a vast area of land in Indonesia. By 2016, licenses for oil palm had been issued covering 21 million hectares, an area seven times the size of Belgium. While considerable attention, both within Indonesia and internationally, has been focused on the social and environmental crises caused by these firms, the role of corruption in driving them remains almost entirely unexamined. The collusion between plantation firms and politicians is a glaring missing piece of the puzzle, one that does much to explain how the interests of companies consistently eclipse those of Indonesia’s rural citizens. It also provides a cautionary tale for new frontiers, both within the Southeast Asian country and farther afield, where the palm oil industry is just beginning to expand.

In 2016, in an attempt to stem the excesses of the firms operating in Indonesia’s forests, President Joko Widodo announced a freeze on new oil palm licenses. It is expected that the measure will finally be given some legal weight in the coming months and that the president will also mandate a review of all existing licenses. Approximately half of the area under license has yet to be exploited, and holds 6 million hectares of forests and carbon-rich peatlands. If the review delves into the circumstances surrounding the issuance of the permits, it could finally expose and loosen the grip of corporate interests over local politicians, sparing a vast area of forest and millions of people whose fate hangs in the balance.

FOREST CANOPY IN GUNUNG MAS, 2017

In June this year, 115 districts, 39 towns and 17 provinces across Indonesia will return to the polls. The risks that dark money will subvert democracy yet again are widely recognised. Laode Syarif, deputy commissioner of the KPK, declared the agency would monitor every stage of the contests. Seven candidates were arrested in the first two months of this year alone, all suspected of soliciting cash bribes to fund their campaigns. More complex schemes may once again fly under the radar, allowing the flow of resources to private firms driving the crisis to continue undiminished.

Gunung Mas is among the districts that will elect a new bupati this year. Hambit Bintih died of cancer in 2016, while still serving his prison sentence. His erstwhile rival, Jaya, will stand again. Hambit’s fixer speculated that Jaya would have lost a fortune in 2013 and risks ruin if he fails to win this time round. His competitors will include Hambit’s son-in-law, Rony Karlos, who will take up the mantle for the family.

Cornelis completed his sentence and has now been welcomed back into the fold at the companies he co-owns with Elan, Edwin and CBIP. He declined our requests for an interview. “I’m just a local, real Kalimantan local, a Dayak,” he said when we reached him by phone, to explain why he couldn’t comment on the sale of the companies to CBIP. Cornelis described himself as a “victim” in the Akil Mochtar scandal. “I’ve done my punishment,” he said. “Don’t ever bring this up again.”

In a broad, dim office on the first floor of his official building on the outskirts of the district capital, Arton, the current bupati, told us he was optimistic about the future of Gunung Mas. Weary from his two terms at the top of government in the district, one as Hambit’s deputy, he was not planning to stand in the election. But, he believed, every candidate would “share the dream to develop Gunung Mas.”

Then he paused and added, “as long as they’re not corrupt”.

•          •          •

Illustrations by Sophie Standing. Photos by Sandy Watt and Tom Johnson unless otherwise stated. Graphics by Leo Plunkett and Sandy Watt. This story is available in Bahasa Indonesia at www.geckoproject.id

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