Tag: indonesia

Committee claims that Third Papua Congress has Jakarta’s support

To be held 16–19 October
Bintang Papua, 2 October 2011JAYAPURA – Despite failing to meet directly with President Susilo Bambang Yudhoyono (SBY), Team 7 of the Third Papuan People’s Congress, lead by Selfius Bobii stated that they had received a positive response from the central government. On Saturday 1 October, at a press conference held on his return from Jakarta, Selfius Bobii said “I and the Jakarta team have met with the Deputy Head of the Internal politics section, Judy Harianto of the Ministry for Politics, Law and Security,” accompanied by the entire Third Papua Congress committee. Following the two meetings held with the Ministry of Politics, Law and Security, according to Bobi, the central government has responded well to the planned agenda for the Third Congress. “If the president is free then he will open the conference, otherwise he will be represented by a minister,” he explained. During this opportunity in Jakarta, invitations were given to the Ministry for Politics, Law and Security and to the Secretary of State, for the President. “They (the central government) will be present as the keynote speaker,” he explained.

It was added that the congress organisers, who at this point have not yet confirmed the venue, have also invited all foreign embassies. In reference to support requested from Papua’s provincial government, according to Bobii there was none as yet. “We went to the DPRP several times, but the situation has been like this for ages… so we just let it be,” he explained disappointedly.

The Third Papua Congress will begin with a blessing on Sunday 16 October 2011. It will then be formally opened on Monday (17/10). He said that the Third Papua Congress is part of the democracy process in Indonesia and is supported by international law and national Indonesian law. The Third Papuan People’s Congress is also aimed at the fulfilment of human rights. In the matter of law and human rights, the state and government hold the status of protectors, said Selfius Bobii on Sunday 1 October at the press conference. Bobii said “As a democracy festival for the Papuan people at the highest level, the momentum of the Third Papuan People’s Congress on 16–19 October 2011 will be attended by representatives of the Papuan people from both outside and inside Papua, in an attempt to provide leadership for their aspirations in a dignified and democratic fashion, using democratic mechanisms which are supported by international law and the state constitution of the Republic of Indonesia.”

Bobii went on to say: ‘Invitations to all foreign countries and embassies have already been sent, and the majority have already responded that they will be present at the Third Papuan People’s Congress. There are those who have not yet responded, but of those internal invitees, 99% have already responded, leaving only 1% of our friends who don’t yet understand the right to struggle,” he said. When asked about the problem of TPN/OPM who do not agree with the agenda, Bobii firmly stated “We are well aware of each group’s position and we’re not going to try to interfere, but we respect and support each other in accordance with our respective roles. The Third Congress is a consolidation of the Papuan people, both in the towns and outside the country. Since 1965 the struggle came from the towns to the forest, then between 1991–1998 the struggle returned from the forest to the town, and now the struggle is already in the towns, do we want to go back to the forest again? Because of this we speak of our self-awareness and the roles of each group. If it’s the civilian wing…? Then the civilian wing has to know their role. Likewise if it’s the diplomatic wing, he should know what his job is…! So I am emphasising self-awareness and for each to carry out their role. We have already told our elders who previously did not agree that this is no longer the time for weapons and violence, it’s different now,” Bobii said firmly, continuing: “The struggle today is a peaceful struggle, in accordance with the decision of the Second Papuan People’s Congress; the peaceful struggle must be defended, because the peaceful struggle is sacred” he remarked. “We hope that in this struggle, nobody will be dishonoured,” he added.

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West Papua Report October 2011


This is the 90th in a series of monthly reports that focus on developments affecting Papuans. This series is produced by the non-profit West Papua Advocacy Team (WPAT) drawing on media accounts, other NGO assessments, and analysis and reporting from sources within West Papua. This report is co-published with the East Timor and Indonesia Action Network (ETAN). Back issues are posted online at http://etan.org/issues/wpapua/default.htm Questions regarding this report can be addressed to Edmund McWilliams at edmcw@msn.com. If you wish to receive the report via e-mail, send a note to etan@etan.org.

Summary: Papuans will convene a third “National Congress,” an historic convocation that follows congresses in 1961 and 2000. Military and police forces have attacked civilian homes, purportedly in pursuit of those responsible for an August incident that may have been staged. In the wake of growing violence, leading human rights organizations have called on the Indonesian government to “re-assess” its resort to military measures to address dissent in West Papua. The giant mining firm Freeport McMoran is facing growing pressure from labor and the government. The attention focused on Freeport has once more brought to light the enormous profits and tax revenues flowing from the mining operation. These riches stand in stark contrast to the grinding poverty endured by Papuans whose resources Freeport is exploiting. The UN Secretary General has publicly retreated from comments in which he appeared to recognize the need for the UN Decolonization Committee and the Human Rights Council to take up the denial of Papuan rights to self-determination and other violations of human rights.

Contents:

Papuans To Convene Third National Congress in October

The Papuan National Collective, comprising leaders of the Dewan Adat Papua (the Papuan Customary Council), and leaders of Papuan religious, human rights, women, and youth organizations have announced the convening of the “Third Papuan Congress,” in Jayapura, October 16-19, 2011. Members of the Provincial Papuan Assembly (DPRD) will also participate in the congress.

According to the Collective leaders, the theme of the congress is “Affirming the basic rights of the indigenous Papuan people for the present and the future.”

The gathering will address agendas presented by all participating representatives such as the protection of fundamental human rights, including the right to self determination; accountability of security forces for crimes against the civilian population, and protection of the environment. The leaders have noted that they expect congress to reaffirm Papuans’ commitment to pursue respect for their rights through peaceful means.

The First Papuan Congress occurred on October 16-19,1961. At that congress, Papuan leaders declared the desire of the Papuan people to become a free and independent nation. The second congress convened in May 2000 with the support of then Indonesian President Abdul Wahid Rahman. Papuan leaders rejected the 1962 “New York Agreement” which surrendered control of West Papua to Indonesia. The congress also rejected the “Act of Free Choice,” the fraudulent process that in 1969 denied Papuans their right of self-determination. The congress called on the UN to revoke November 19, 1969 UN Resolution 2504 which formally recognized Indonesia’s annexation of West Papua.

Military and Police Attack Civilian Homes

A combined military and police force on August 31 raided civilian homes near Nafri, outside Abepura, where an August 1 assault on a largely civilian convoy killed four and wounded six. The perpetrators of that attack remain unknown though investigations by local NGOs point to a provocation by the Indonesian military‘s notorious special forces (Kopassus).

The Nafri attack may have been part of a strategy by security forces to create instability to undermine large scale Papuan demonstrations set for August 2 (see August West Papua Report). According to the government, the military/police attack on the civilian homes was in pursuit of Papuans responsible for the Nafri attack.

A report translated by TAPOL provides detail on the late August military and police operation. On 31 August , the homes of four Papuans were targeted by the Army (TNI-AD) and Brimob (special unit of the Indonesian police) supplemented by the police force of Papua. Thirteen Papuans were arrested. Local witnesses report that occupants of the four houses were in their homes at the time of the operation and that some of whom were asleep. The security forces entered the area where the homes were located and started firing warning shots which traumatized the local people. Although the thirteen initially evaded the security forces, all of them, including an eight year old girl, were arrested. (See also West Papua Media Alerts’ Special Investigation: State terror campaign around Jayapura.)

Ten, including the eight year old, were subsequently released but two were two detained, Ekimar Kogoya, 22 years, and Panius Kogoya, 20 years old. The security forces that conducted the sweep, which appear to have included elements of the notorious Detachment 88 , are formally charging the two now being held with involvement in the killings in Nafri August 1 and say that they are suspected of being members of the TPN/OPM.

Mathius Murib, deputy chair or the National Human Rights Commission’s (Komnas HAM) Papua branch told media that “proper procedures were not followed and the people who were detained were subjected to mal-treatment, and what is even more disturbing is that a child of 7 or 8 years old was kidnapped at the same time.”

The Nafri incident and subsequent “sweeps” follows the standard modus operandi of Indonesian security forces operating in West Papua: An incident, possibly staged, is used to justify augmenting security forces in an area which then violate local citizens rights with sweeps designed to intimidate the local population. These sweeps usually coincide with periods of growing popular protest over political repression and human rights violations. This modus operandi is part of the Indonesian security force playbook and was regularly witnessed at work in Indonesian-occupied East Timor.

Prominent Human Rights Organizations Call for End to Indonesian Government Resort to Military Measures in West Papua

The Asian Forum for Human Rights and Development (FORUM-ASIA), the Commission for the Disappeared and Victims of Violence (KontraS), the Indonesian Human Rights Monitor (Imparsial), and the International Federation for Human Rights (FIDH) urged the Indonesian government to reassess its reliance on military measures to address growing dissent in West Papua. The organizations noted in a September 21 statement that their call came amidst growing violence in the region.

WPAT notes that security force reliance on extrajudicial killing, arbitrary arrest, torture of detainees, and repression of peaceful dissent reflect the reality that Suharto-dictatorship rules and procedures still apply in West Papua.

The four organizations decried the continuing buildup of security forces in West Papua, which Imparsial claimed was in the range of 14,000 personnel, and the continuing impunity accorded those forces for their violation of constitutionally protected human rights. They also condemned Government efforts to preclude monitoring of conditions in West Papua by journalists, international human rights monitors and other legitimate observers.

The four organizations called on the Indonesian government to:

  • Instruct its military to immediately cease all unlawful surveillance activities in Papua and revise its current draft intelligence bill by incorporating recommendations by civil society and bringing it into line with the Indonesian Constitution and Criminal Procedure Code, as well as international human rights law;
  • Take steps to reduce the heavy presence of non-organic military personnel and their involvement in civil administration in Papua and seriously implement security sector reform;
  • Fully and credibly investigate all past and new allegations of human rights abuses, especially those perpetrated by state security forces, and promptly bring perpetrators to justice;
  • Strengthen civilian oversight and rigorous parliamentary scrutiny of military policies, operations and budget; and
  • Respect the role of human rights defenders and ensure unfettered access to Papua by civil society groups and actors, including foreign and domestic journalists and independent human rights monitors.


Freeport Under Growing Labor and Government Pressure

Workers at the giant Freeport McMoran gold and copper mine have been on strike since September 15 demanding higher wages and protesting numerous violations of their rights.

The violations they contend the company has committed include Freeport’s hiring of strike breaker workers (scabs). It remains unclear whether courts will sanction the strike action as legal.

In addition to facing pressure from its workers, Freeport is also under government pressure to renegotiate is contract with the Indonesian government. All major foreign mining firms in Indonesia are obliged to renegotiate their contracts to ensure that they are in accordance with the 2009 Mineral and Coal Law which is intended to increase government income from the mining sector. The new law mandates that existing mining contracts be adjusted to the in accordance with the new law. Freeport is one of the few foreign mining firms that has yet to renegotiate its contract.

According to Freeport, under its existing 1991 contract, it has been Indonesia’s largest tax payer: Freeport said in a press statement that in the first half of this year, the company paid US$1.4 billion in financial obligations to the Indonesian government. From 1992 to June 2011, the company contributed a total of $12.8 billion to the country.

The Jakarta Post writes that the firm’s mine covers 213,000 hectares. Royalty payments from the company accounted for 68 percent of Papua’s gross domestic regional product (GDRP) and 96 percent of Timika’s GDRP in 2010. During that year, the company contributed $1.9 billion to the state income from tax and non-tax payments and invested $2.1 billion.

WPAT Comment: While Freeport is a major source of revenue for the Indonesian government, that revenue is only a small portion of the vast profits that Freeport has reaped from its operation which were launched in 1967, even before Indonesia formally annexed West Papua in 1969. The extraordinary wealth accruing to Freeport and the Indonesian government stands in stark contrast to the grinding poverty and lack of development that has been the plight of the Papuan people, particularly those Papuans such as the Kamoro and Amungme people who have seen their lands stolen and polluted by the Freeport operation. The corrupt bargain between Jakarta and Freeport is a legacy of the 1962 “New York Agreement” which the US Government orchestrated in a cold war ploy, absent the consent or even the involvement of the Papuan people.

UN Secretary General’s Candid Comments on West Papua Partially Pulled Back

UN Secretary General Ban ki-Moon, at a press conference in Auckland New Zealand on September 7, spoke directly and candidly in response to two questions about West Papua. His comments appeared to suggest his support for international calls for the West Papua to be listed among those territories considered by the UN General Assembly’s Decolonization Committee. He also appeared to be sympathetic to discussion of West Papua in the Human Rights Council. Implicit in the UNSG’s comments were both a recognition that there was merit in a review of West Papua’s legal status and that there was a basis for concern regarding the human rights situation in West Papua. In particular, the UNSG responded to what was a legal/political question about West Papua by introducing in his response concern over human rights in West Papua.

A portion of the Secretary General’s comments were corrected in New York on September 13 by an unnamed “spokesperson for the Secretary-General on Papua.” The “spokesperson” contended that the Secretary-General had been speaking “off-the-cuff.” The Secretary-General’s original comments in New Zealand are nonetheless significant. The text of the two questions and his responses follows:

Question: [unclear] With regards to human rights – for more than forty two years, there’s a struggle in West Papua as people seeking their government in the province of West Papua. What is the United Nations stand on that?
 
BKM: This issue should also be discussed at the Decolonisation Committee of the United Nations General Assembly And when it comes again, whether you are an independent state or a non-self-governing territory or whatever, the human rights is inalienable and a fundamental principle of the United Nations.
 
We will do all to ensure that people in West Papua, their human rights will be respected.
 
Question: Does a human rights fact-finding mission has be dispatched to West Papua at some time?
 
BKM: That is the same answer [to a previous question on Fiji] that should be discussed at the Human Rights Council amongst the member states.
Normally the Secretary General acts on the basis of a mandate given by inter-governmental bodies.

The spokesperson’s statement was as follows:

His off-the-cuff response may have led to the misunderstanding that he was suggesting the matter of Papua should be placed on the agenda of the Decolonization Committee. The Secretary-General wishes to clarify that this was not his intention.

Interestingly, the spokesman’s correction let stand the UNSG’s apparent endorsement of the need for a discussion of the human rights situation in West Papua in the Human Rights Council.

Back issues of West Papua Report

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Freeport-Indonesia wages the lowest in the world, according to SPSI

Bintang Papua, 3 October 2011Thousands of workers from Freeport Indonesia  have been on strike since 15 September demanding higher wages and better personal welfare, bearing in mind  the great risks that their work involves. The wages they currently receive are far from adequate and are way below the wages paid in mines elsewhere the world.

‘Of all the mining companies anywhere in the world, the wages paid to workers at Freeport are the lowest. even though the risks they take are extremely high, working at a depth of 4,200 meters. It’s very dusty, high rainfall and extremely cold, as we mine copper, gold, silver and other minerals,’ said Frans Wonmaly, member of the executive committee of the trade union SBSI.

In 2006 the workers’ pay in North America was $10.70 an hour, in South America, it was $10.10 an hour but in Indonesia it was only $0.98 an hour. In 2010, the pay had reached on average $66.43 an hour, whereas in Indonesia it was only  $4.42 – $7.356 an hour

‘As compared with mining companies elsewhere in the world, the difference is like heaven and earth, and this is why we are making demands from the management,’ he said. All they were asking for was a rise to $30-$50 an hour.

Wonmaly strongly denied a recent statement by Armando Mahler, president-director of Freeport Indonesia to the effect that the workers would be losing Rp 570,000 a day.’ I personally have reached Grade 3 and I only get Rp7 million a month. If I were getting Rp570,000 a day I would be receiving Rp17.2 million a month,’ he said, while holding up the joint contract book.  As yet, negotiations between the workers on strike and the management have not made any progress. Despite the mediation of the labour affairs ministry in Jakarta, there is a deadlock.’The management has not shown any intention to recognise the aspirations of their workforce.’

Furthermore, the management is spreading propoaganda, sending sms messages to the families of the workers and spreading reports in the local media that the workers should go back to work. Wonmaly said that the strike will continue until their demands have been fully met by the company. ‘It will continue till 16 October and if by then, negotiations have still led nowhere, the workers have agreed call in lawyers and take the dispute to court.’

According to a spokesman of the company, 1,217 contract workers have returned to work.in the higher reaches of the mine which they travel to daily by 23 buses.

The production and dispatch of concentrates is now very limited, while the management have expressed their appreciation to those workers who have remained at work.

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State is obliged to protect striking PT Freeport Indonesia workers

Statement by the Coalition for the Freeport Indonesia Workers’ Struggle – September 28, 2011

We fully support the strike by PT Freeport Indonesia workers for better wages and conditions. The government must guarantee legal protection to the workers and protect them against intimidation and threats while they are on strike and conducting negotiations with the company in accordance with Law Number 13/2003 on Labour.

The strike by around 8,000 PT. Freeport Indonesia employees in Timika, West Papua, is to demand that the management bring their wages into line with PT Freeport Mc Moran wage standards in other countries. Freeport currently pays its workers as little as US$1.50 and hour and workers are demanding that this be increased to US$3 (25,000 rupiah) an hour. Freeport workers in other countries currently receive an hourly wage of US$15 or 128,250 rupiah per hour.

The Freeport management has refused to fulfill the workers’ demands. A tripartite meeting has been held between the government, Freeport management and workers, but the workers have still not succeeded in reaching an agreement.

Since the strike began on September 15, there have been numerous incidents of pressure and intimidation against the workers, either directly by the Freeport management or through the arrogant actions of the police and the Mobile Brigade (Brimob).

This includes the attempted shooting of PT Freeport Indonesia All Indonesia Workers Union (SPSI) chairperson Sudiro on September 11, the removal of employees’ rights through the “No Work, No Pay” letter, pressure on striking workers and apprentices to leave Tembagapura, contract workers being forced to work for 12 hours straight to meet production losses during the strike, replacing contract workers with as many as 100 strike breakers sent from Jakarta by the companies PT. Tri Parta Jakarta and PT. Komaritim, forced removals from the workplace and employees being forcibly picked up at their homes using DS-1643 and DS-1500 vehicles.

There has also been intimidation from PT Freeport Indonesia foreign workers through Deputy President Director John Hollow (a US citizen) who signed a letter stating that 200 permanent workers were to be laid off. The systematic threats of dismissals by the company management have been supported by the police, Brimob and Freeport security.

In one instance this involved a Freeport level 1 staff member “X”, who was not prepared to give their name because they were concerned for their personal and family’s security. X received a letter of temporary release from duties (RFD) dated September 24 from a superior. X was accused of spreading confidential company information in violation of company regulations. X was deemed to be indirectly involved because X provided the confidential company information (related to employee wages) that trigged the dispute between workers and management. Two days later on September 26, X was forcibly picked up at the Tembagapura employees barracks and then transported to Timika by the management at 6.10pm local time escorted by a Brimob officer, a superior who is well known to X, two security personnel and a company driver. X stayed overnight at the PT Freeport base camp near the Timika airport and the following day was then sent back to his home town.

The example above is evidence that the Freeport management is more interested in throwing money at security personnel that comprise members of the police and Brimob to “safeguard their assets” than pay decent wages to their workers who have worked for and served company for decades. In addition to demands for wage increases, the strikers are also reasonable healthcare facilities for workers.

The Coalition for the Freeport Indonesia Workers’ Struggle therefore states:

1. The management must immediately increase workers wages from US$1.5 an hour to US$3 per hour.

2. The management must provide the same facilities to local workers as those given to foreign workers (healthcare services, education for workers’ children)

3. It is the worker’s right to go on strike and the management does not have the right to dismiss workers that are on strike.

4. Foreign employees working at PT Freeport Indonesia do not have the right to become involved in issues between workers and the management. This is in conflict with the legal principles contained in the 2003 Labour Law and if they continue to do so, the government must deport the foreign workers concerned.

5. The police and Brimob do not have the right to become involved in industrial affairs between the management and workers, as regulated under Article 143 of the 2003 Labour Law.

Jakarta, 28 September 2011

Coalition for the Freeport Indonesia Workers’ Struggle:

The Papua Student Alliance (AMP), the Papuan Traditional Social Community Against Corruption (Kampak Papua), the Commission for Missing Persons and Victims of Violence (Kontras), the Indonesian Association of the Families of Missing Persons (Ikohi), the Papua NGO Cooperative Forum (Foker LSM Papua), the Working People’s Association (PRP), the People’s Liberation Party (PPR), the National Trade Union Preparatory Committee (KP-KSN), the Indonesian Forum for the Environment (Walhi), the Indonesian People’s Opposition Front (FORI), the Student Action Union (KAMLAKSI), the Jakarta Legal Aid Foundation (LBH Jakarta), the Indonesian Transportation Trade Union of Struggle (SBTPI), the Student Struggle Center for National Liberation (PEMBEBASAN), Praxis, the Semanggi Student Action Front (FAMSI), the Strategic State-Owned Enterprises Federation (FED BUMN Strategis), the Indonesian Pulp and Paper Trade Union Federation (FSP2KI), the West Java Federated Trade Union
for Justice (FSPK Jabar), the Central Java Indonesian Farmers Federation Union (FSPI Jateng), the Banten Primary Industries Trade Union Federation (FSBKU Banten), the South Sulawesi Nusantara Trade Union Alliance (GSBN Sulsel), the South Sulawesi Indonesian Federated Trade Union of Struggle (FSPBI Sulsel), the North Sumatra Plantation Workers Trade Union (Serbuk Sumut), Perbumi North Sumatra (Perbumi Sumut), the East Java People Based Trade Union (SBK Jatim), the Sidoarjo Independent Trade Union (SBM Sidoarjo), the Malang Independent Trade Union (SBM Malang), the Working People’s Association-Organisational Saviours Committee (KPO-PRP) and the United Indonesian Labour Movement (PPBI).

[Translated by James Balowski.]

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A history of violence at Indonesia mine/AJE

Rio Tinto has cosy ties with the Indonesian military, who have a long history of human rights abuses.
Freeport’s James Moffett has said ‘there is no alternative’ to the company’s reliance on the Indonesian military [EPA]


Investing in conflict-affected and high-risk areas is a growing concern for responsible businesses and investors. Companies based in developed countries often operate in lesser-developed foreign markets, where governance standards are lax, corruption is high and business practices are poor.

These pieces focus on one specific Anglo-Australian company and their American partner that jointly operate a mine in West Papua, one of the poorest provinces of Indonesia. The risks for the company include the potential to contribute to environmental and social damage in a foreign market. The risks for investors include financing a company that does not get its risk management right.

This is the third chapter of a four-part essay that examines how the Norwegian Pension Fund came to blacklist the mining giant Rio Tinto. The first part can be found here, and the second part can be found here.

In February 1995, Anglo-Australian mining giant Rio Tinto announced three deals that secured access into Grasberg, a massive gold and copper mine in the Indonesian province of West Papua.

First, Rio Tinto agreed to invest $500m of new capital in Arizona-based mining corporation Freeport for a 12 per cent stake in the US business. Second, Rio Tinto agreed to finance a $184m expansion of the Grasberg mine. In return, it received 40 per cent of post-1995 production revenue that exceeded certain output targets and, from 2021, a 40 per cent stake in all production. Finally, Rio Tinto would receive 40 per cent of all production from new excavations elsewhere within West Papua.

Rio Tinto was effectively doing business with Indonesian dictator Suharto, too.

In response, Freeport told shareholders that Rio Tinto would “contribute substantial operating and management expertise” through proportional representation on the board – as well as on various Grasberg operating and technical committees, from which the “policies established by the [board] will be implemented and operation will be conducted”.

Speaking of the “exceptional potential” of the deal, Rio Tinto’s then chief executive, Robert Wilson, agreed that“given [Rio Tinto’s] experience in other major open-pit copper ore bodies such as Bingham Canyon, Palabora and Escondida, we anticipate considerable mutual benefit”.

Rio Tinto obviously liked how Freeport-Indonesia did business, especially at Grasberg.

US government: Grasberg contravenes the Foreign Assistance Act

By October 1995, an independent US government agency had cancelled Freeport’s international political risk insurance. The insurer, the Overseas Private Investment Corporation (OPIC), specifically cited the Grasberg mine operation as contravening the Foreign Assistance Act of 1961, which required that “overseas investment projects do not pose unreasonable or major environmental hazards or cause the degradation of tropical forests”. Freeport was the first policyholder to be terminated by the OPIC for ethical violations, despite President Suharto and Freeport director Henry Kissinger heavily lobbying the US government to reinstate the policy. Following OPIC’s decision, the company did not disclose the environmental performance of the mine again until 2003 – it no longer had to.

For a brief time in 2000 and 2001, a particularly sympathetic Indonesian environment minister, Sonny Keraf, pursued numerous avenues to impose penalties and fines on Grasberg, including an unsuccessful attempt to invoke the criminal section of the 1997 Environmental Law to cease Freeport-Indonesia’s riverine method of tailings disposal, by which the corporation fed the mine’s waste product into nearby rivers. Under pressure for his pursuit of the part-Indonesian-owned Freeport, Keraf was replaced following the 2001 election.

As Suharto’s reign came to an end, an increasing number of West Papuans also began to campaign against the environmental and social impact of Grasberg. Papuan leaders brought the matter before the US Federal District Court in April 1996 and before the Subcommittee on International Operations and Human Rights of the US House of Representatives in May 1999. Many more attempts, including one to address shareholders at Rio Tinto’s 1998 annual general meeting in London, were foiled by Indonesian authorities.

Building on restrictions introduced in 1991, the US government banned arms transfers to Indonesia for widespread human rights violations in East Timor in 1999. Consequently, Freeport’s payments to the Indonesian military and security forces were more closely scrutinised. The Wall Street Journal found that, between 1991 and 1997, Freeport guaranteed more than $500m in loans so that Suharto’s family and allies could purchase a stake in the mine – a great portion of which was written off by Freeport in 2003.

An outspoken Australian academic, Lesley McCulloch, also found that the 1996 Timika riots adjacent to the Grasberg mine led to a spike in monetary demands by the Indonesian military, resulting in the funding of a $35m army base. Freeport and Rio Tinto refused to disclose details of the payments.

A history of violence

Then in August 2002, two US teachers and an Indonesian employee of Freeport-Indonesia were murdered at the Grasberg mine complex. Following one rebel’s admission that he was a business partner of the Indonesian military, several New York City pension (superannuation) funds formally requested that Freeport disclose the nature of its Indonesian “security” payments. The shareholders were concerned that such payments violated the Foreign Corrupt Practices Act.

Although Freeport was not required to put the proposal to shareholders, the company did begin to disclose its security-related payments. Filings with the US Securities and Exchange Commission since 2001 have confirmed annual payments reaching an average $5m each year for government-provided security of the Grasberg complex and its staff – and fluctuating annual costs reaching $12m for unarmed, in-house security costs. A spokesman for the company later told the Jakarta Post that these payments had been taking place since the 1970s.

Sporadic accounts began to surface – in the Sydney Morning Herald, Jakarta Post, and New York Times – quoting internal sources that confirmed that the Indonesian had masterminded the killings to extort monies from the Grasberg operators. “Not surprisingly, the Indonesian military has exonerated itself,” US Congressmen Joel Hefley and Tom Tancredo said in June 2003. “American investigative teams, including the FBI, have not been able to complete their investigations mainly due to the Indonesian military’s refusal to co-operate and tampering of evidence.”

Freeport remained steadfastly opposed to later demands by New York City pension fund investors to cease all payments to the Indonesians until they complied with official US investigations into the August 2002 murders. At the 2004 annual general meeting, president and chief executive Richard Adkerson advised shareholders: “The management and Board believe that the stockholder proposal mischaracterises the company’s relationships with Indonesian security institutions and suggests actions that would undermine the company’s relationship with the Indonesian government and the security of the company’s operations.”

Despite the ongoing human rights and corruption concerns in West Papua – including a report by the World Bank and a letter by US senators to then UN Secretary General Kofi Annan calling for the appointment of a special representative to Indonesia – after a vote by shareholders, the resolution was not passed.

On March 23, 2004, Rio Tinto announced it had sold its 11.9 per cent shareholding in Freeport. Rio Tinto made a $518m profit. Citing no environmental or social reasons, Rio Tinto’s then-chief executive Leigh Clifford reassured shareholders that “the sale of [Freeport] does not affect the terms of the joint venture nor the management of the Grasberg mine” and that through “our significant direct interest in Grasberg, we will continue to benefit from our relationship with Freeport”.

Rio Tinto remained committed to the mining of Grasberg and would continue overseeing its management through various operating and technical committees.

Sensational claims that illegal payments to individual soldiers, units, and policemen had been routinely made to secure the Grasberg complex and its staff came to light in 2005. A report by Global Witness revealed that an additional $10m had been paid directly to individual military and police commanders between 1998 and 2004. This included $247,000 between May 2001 and March 2003 to General Mahidin Simbolon, former head of the 1999 East Timor massacre, and monthly payments throughout 2003 to the police Mobile Brigade – a group cited by the US State Department as having “continued to commit numerous serious human rights violations, including extrajudicial killings, torture, rape, and arbitrary detention”.

With the US arms trade embargo still in place, Rio Tinto had reassured the market that payments to the Indonesian military were “legally required and legitimate” only months before the news broke. Now Rio Tinto and Freeport-Indonesia came under even greater public pressure. At Rio Tinto’s next shareholder meeting, after several West Papuans refugees made statements to the board on Grasberg, shareholder activist Stephen Mayne suggested that “the most appropriate thing for Rio Tinto to do would be to exit”. After confirming that Rio Tinto’s contractual obligations would permit such a move, then-chairman Sir Rod Eddington informed shareholders that they “make a considerable effort to ensure that the best that Rio Tinto can offer to Freeport in the management of that venture is available to them”.

An Indonesian ministerial decree in 2007 demanded that the security of “vital national objects” – such as Grasberg – be handed over to the police within six months. Evidence obtained by world news service AFP suggests this is not happening. In a filing to the US Securities and Exchange Commission, Freeport disclosed additional direct payments of “less than” $1.6m in 2008 to 1,850 soldiers, despite the fact that 447 policemen make up the official number of personnel responsible for security at the Grasberg complex.

Unrepentant

The company’s 2008 Sustainable Development report confirms that Freeport-Indonesia makes contributions to “security institutions (including both police and military)”. Alarmingly, according to Amnesty International, as recently as 2008 there have been fundamental human rights violations such as the “torture, excessive use of force and unlawful killings by police and security forces” – reports that have subsequently been confirmed by the UN Special Representative of the Secretary General on Human Rights Defenders and the United Nations Committee against Torture.

“There is no alternative to our reliance on the Indonesian military and police,” Freeport chairman James Moffett said to the New York Times in 2005. “The need for this security, the support provided for such security, and the procedures governing such support, as well as decisions regarding our relationships with the Indonesian government and its security institutions, are ordinary business activities.”

Part 4 to follow next week.

This is an extract of a chapter from the book, Evolutions in Sustainable Investing: Strategies, Funds and Thought Leadership, to be published by Wiley in December 2011.

NAJ Taylor is a PhD candidate in the School of Political Science and International Studies at the University of Queensland, and casual lecturer in the Faculty of Law and Management at La Trobe University.

Follow NAJ Taylor on Twitter: @najtaylordotcom

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