US Hopes Apache Sales Will Keep Indonesia on Side

Jakarta Globe, August 27, 2013

An AH-64 Apache from the US Army’s 101st Aviation Regiment in Iraq.
(Wikimedia Commons Photo).

Indonesia will buy eight Apache attack helicopters off the United States, it was announced on Monday, as US Defense Secretary Chuck Hagel met Indonesian President Susilo Bambang Yudhoyono in Jakarta in what analysts said was a diplomatic bid to check the rise of China.

During the meeting, Yudhoyono said that Indonesia-US cooperation could enhance the prosperity of both nations, as well as have important implications for the peace and stability of Asia, according to a spokesman.

The world’s largest economy is in the process of shifting resources in Asia and the Pacific as part of a “pivot” with a view to the emergence of China.

“We are strengthening our bilateral ties and our cooperation in the region,” Yudhoyono said on Monday.

Both statesman said the Asia-Pacific region was an engine of global economic growth, underscoring the importance of peace and stability in the region, including a peaceful resolution to South China Sea territorial disputes.

“South China Sea is part of … the larger picture of relations in the region,” said Teuku Faizasyah, Yudhoyono’s spokesman for international affairs.

Hagel, for whom Jakarta was the second stop on a week-long four-nation trip that began in Malaysia on Saturday, voiced US appreciation for Yudhoyono’s leadership, which he said contributed to regional stability.

“I bring you greetings from President [Barack] Obama,” Hagel told Yudhoyono at the start of their meeting.

Hagel said the US president was “looking forward to seeing you in October,” referring to the Asia-Pacific Economic Cooperation leaders meeting in Bali.

The defense secretary added that Washington was committed to “deepening and strengthening” ties between the two countries.

Obama spent part of his childhood in Indonesia and has called for improved ties with the world’s most populous Muslim-majority country, which has embraced democracy since the downfall of dictator Suharto in 1998.

The United States has gradually expanded cooperation with Indonesia’s military over several years, even while voicing concerns about the country’s human rights record.

US officials say the Indonesian military has improved its human rights practices and that Washington has an interest in expanding cooperation on counter-terrorism.

The US tilt to Asia is driven in part by the region’s growing economic importance and concerns over China’s expanding military might.

Several analysts said that Monday’s announcement of the sale of the eight Boeing AH-64E Apache helicopters in a deal worth $500 million (including radar, training and maintenance), was part of a broader effort to persuade Indonesia to maintain its position as US friend amid the rise of China.

“I think the US needs to keep Indonesia close. And offering military equipment is one way to do it,” said Aleksius Jemadu, dean of Pelita Harapan University’s social and political science department.

Officials confirmed that the sale represented the culmination of more than a year of behind-the-scenes work by Indonesia, which saw the helicopters as a key part of a wider plan to modernize its weaponry.

A 14-person delegation, including Army Chief Gen. Moeldoko and Defense Ministry Secretary General Lt. Gen. Budiman, traveled last week to a Boeing factory in Arizona to inspect the aircraft.

On meeting the Indonesian delegation, Boeing business development manager Dave Bostrum said the deal was important to the evolution of the Indonesian military. “The Apache is expected to be a key part of Indonesia’s continuing efforts to improve its strategic defense capabilities,” he said.

When it first emerged that Indonesia wanted to acquire the helicopters, two human rights groups — The East Timor Action Network and West Papua Advocacy Team — wrote to the US Congress expressing their opposition to the sale.

Indonesia’s defense preparedness has lagged in recent years, with econ o mic problems preventing the country from maintaining or upgrading its military equipment. During his first term, Yudhoyono slashed defense purchases to free up money for economic and social policies, but he later increased the defense budget.

For 2014, defense allocations stand at Rp 83 trillion ($7.65 billion), the largest share of any government program.

Beside bilateral and regional issues, Yudhoyono and Hagel also discussed global issues — including the conflicts in Syria and Egypt— where Indonesia may play a role. The US has indicated it is preparing for military action in Syria.

“The president expressed Indonesia’s position on Syria and Egypt,” Faizasyah said.

After meeting with Yudhoyono, Hagel met with Indonesian Defense Minister Purnomo Yusgiantoro in a follow-up to talks held recently at the Shangri-La Dialogue.

Hagel will head to Brunei today for a regional defense gathering that will include China. On Thursday he will fly to the Philippines, his final stop.

Additional reporting from AFP & Reuters

Adhi Karya Paid Rp 80b to Win Hambalang Tender, Says Former Director

Jakarta Globe, Rizky Amelia & ID/Aris Cahyadi, August 23, 2013

A former director of state-owned construction firm Adhi Karya said on Friday that the company paid Rp 80 billion ($7.4 million) to win the contract for the graft-ridden Hambalang sports center project.

“Rp 80 billion was [spent for the project],” Teuku Bagus Mokhamad Noor told reporters at the Corruption Eradication Commission (KPK) headquarters.

He did not elaborate.

Teuku, who was named a suspect in the case in March, was being questioned by the antigraft body as a witness in relation to former Democratic Party chairman Anas Urbaningrum.

Adhi Karya is alleged to have bribed Anas as well as other legislators to win the tender to build the Rp 2.5 trillion sports center.

Anas was named a suspect for reportedly receiving a Rp 100 billion kickback. He allegedly used the funds to buy the votes of Democratic Party members in his 2010 bid for party chairman.

During a previous interrogation session at the KPK, Teuku said that his company was forced to pay bribes in order to be involved in the project.

“We [Adhi Karya] were manipulated by the project mafia,” he said on July 19 after being questioned by investigators.

He declined, however, to name anyone in this mafia.

Haryo Budi Wibowo, Teuku’s attorney, said that the project mafia his client mentioned had been reported to the KPK.

Teuku previously headed the consortia of the two state-run companies spearheading the project ­— Adhi Karya and Wijaya Karya

The anti-graft agency had only detained Deddy Kusdinar, a mid-ranking Sports and Youth Ministry official. The KPK is yet to arrest high-profile people who have been named suspects, including former Sports and Youth Minister Andi Mallarangeng and Anas.

Anas served on the legislative commission overseeing sports during the budget discussions for the project.

The Hambalang facility in Bogor, designed to become a national multi-sports training center, was initiated by Mallarangeng’s predecessor Adhyaksa Dault, but the budget ballooned from Rp 300 billion to Rp 2.5 trillion under Andi.

The Supreme Audit Agency (BPK) attributed the state losses to irregularities stemming from forged land deeds, manipulation of documents to bypass environmental regulations and a rigged bidding process.

On Friday afternoon, the BPK submitted its audit to KPK chief Abraham Samad. The agency found six irregularities in the project and said that the project caused the state to incur $463.6 billion in losses.

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SBY Dismisses SKKMigas Chief Rudi Rubiandini as KPK Files Charges

Jakarta Globe, Rizky Amelia, Ezra Sihite & Rangga Prakoso, August 14, 2013

Rudi Rubiandini, head of Indonesian energy regulator SKKMigas, speaks during
 an interview with Reuters at his office in Jakarta in this March 6, 2013 file
photo.(Reuters Photo/Enny Nuraheni)

The head of Indonesia’s oil and gas regulator SKKMigas was formally charged with accepting a $400,000 bribe from a private oil firm the Corruption Eradication Commission (KPK) announced on Wednesday.

SKKMigas head Rudi Rubiandini and two others were named as suspects by the KPK one day after their arrest at Rudi’s private residence in Kebayoran Baru, South Jakarta. Rudi was allegedly caught accepting a $400,000 bribe from an official with the Singapore-based Kernell Oil company.

“[The KPK] has decided to escalate the process from questioning to investigation,” Deputy Chief Bambang Widjojanto said at the KPK headquarters. “We named three people as suspects, ‘S’ for [paying a bribe] and ‘A’ and ‘R’ [Rudi].”

The latter two were named as suspects for receiving money.

The corruption scandal is the latest to tarnish the image of Indonesia’s oil and gas industry. The resource-rich nation is one of the most corrupt in the world, according to Transparency International. The conviction of three local employees of a Chevron subsidiary on disputed corruption charges last month cast a shadow of doubt over the nation’s regulatory environment, prompting concern from foreign investors.

Experts have warned that Indonesia’s endemic corruption and a recent wave of resource nationalism could temper investment and hinder economic growth in Southeast Asia’s largest market.

The central government was quick to assure foreign oil firms that industry activities would continue unaffected by Rudi’s arrest. SKKMigas deputy chief, Johanes Widjonarko, was returning home from a trip in Tokyo to assume his superior’s responsibilities on Wednesday.

“The most important thing is to keep the oil and gas industry running well so that investors and businessmen in this industry remain calm,” Minister of Energy and Mineral Resources Jero Wacik told reporters at the State Palace. “This is just like when BPMigas was disbanded. Our main objective is to make sure SKKMigas and the oil and gas industry is not disrupted.”

President Susilo Bambang Yudhoyono temporarily dismissed Rudi from his post in the wake of the KPK’s announcement. He will be permanently dismissed if his case continues to progress, Jero said.

“If Rudi’s legal case progresses there will certainly be a new [permanent] chief,” he said.

Rudi was appointed as head of the new SKKMigas in January shortly after the previous industry regulator BPMigas was disbanded. He previously worked as an oil and gas expert at the state-run Bandung Institute of Technology.

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