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Web-only Exclusives
November 30, 2000

From Our Correspondent: Hirohito and the War
A conversation with biographer Herbert Bix

From Our Correspondent: A Rough Road Ahead
Bad news for the Philippines - and some others

From Our Correspondent: Making Enemies
Indonesia needs friends. So why is it picking fights?

Asiaweek Time Asia Now Asiaweek story

SUHARTO’S MAN

Interested in Indonesia? The man to know is presidential confidant Bob Hasan, the tycoon who handles
Suharto’s charitable foundations -- and his kids’ disputes

By Cesar Bacani and Keith Loveard / Jakarta


JUST CALL HIM KING. If ever there were doubts about his preeminent position in Indonesian business, timber tycoon Mohamad “Bob” Hasan laid them to rest last week. On Feb. 17, he brokered a deal for the development of what is touted as possibly the world’s biggest gold find -- and walked away with 30% of the $68-billion Busang Indonesia Gold JV project. Two days later, he was named the new boss of Astra International, Indonesia’s $5.2-billion automotive, finance and agribusiness giant. The coup came on the heels of his January purchase of 9.6% of Freeport Indonesia, which operates the country’s largest gold mine.

But don’t think that fabulous wealth will all be his. Hasan, 66, became president-commissioner of Astra with the backing of two charitable foundations headed by President Suharto. As Hasan tells it, the Suharto trusts -- Yayasan Supersemar and Yayasan Darmais -- would be the main beneficiaries of the Astra move. “Supersemar gives about $20 million to $25 million in scholarships annually,” he says. “Yayasan Darmais helps 1,200 institutions for the blind, retarded children, orphanages and senior citizens. If we have more funds, we can use the money to do things like build hospitals.”

Others are not as, well, charitable. “You could say [the Astra appointment] is a golden handshake for Suharto’s retirement,” says a stock market analyst and long-time Hasan watcher. At 75, the president has been at the helm for over three decades. A business executive has his own theory: “Suharto has done a remarkable job in developing this country and he is using the funds in the foundations to push the process forward another stage.” Hasan himself says the aim is to make sure the poor will continue to be helped: “When we’re not around anymore, [we want] the two foundations to be like the Ford Foundation and the Rockefeller Foundation.”

Whatever Suharto’s intentions are, Hasan is the confidant who is carrying them out. “I’ve been friends with him for over 40 years,” says the tycoon, who regularly plays golf with the president at the exclusive Rawamangun club. That makes Hasan the essential person to know in Indonesia. “His position is very strong,” says economist Didik Rachbini. Stronger than that of Suharto’s six children, who have built business empires with the help of sweetheart deals? In some ways, yes. In brokering the Busang deal, Hasan shut out Suharto’s eldest daughter Siti Hardijanti Rukmana, better known as Tutut -- at least for now.

The Busang saga started in late 1994, when Canadian exploration company Bre-X Minerals hit paydirt at its concession in Kalimantan. At first, Bre-X said Busang would yield 57 million ounces of the metal. (Freeport in Irian Jaya has reserves of 80 million ounces.) The estimate was later revised to 71 million ounces. Last week, Bre-X senior vice-president of exploration John Felderhof predicted that Busang could produce as much as 200 million ounces of gold. If true (and some Kalimantan miners are skeptical), that would make it the world’s richest find ever.

With assets of less than $18.5 million, Bre-X was in no position to develop Busang. But it was deep into merger talks with Canadian giant Placer Dome (1994 assets: $1.2 billion). Enter another Canadian company, Barrick Gold Corp. (1995 assets: $3 billion), which has former U.S. president George Bush as honorary adviser and ex-Canadian PM Brian Mulroney as a board director. It had an agreement with presidential daughter Tutut that promised her construction contracts for roads and other infrastructure for the mine if Barrick won the development award. Not to be outdone, Bre-X hired a trading company linked to Tutut’s brother, Sigit Harjojudanto, as a consultant.

Indonesian mining officials tried to force a marriage between Barrick and Bre-X -- Barrick to get 67.5% of the mine, the discoverer 22.5% and the government 10%. As the prospect of a sibling tussle loomed, foreign mining companies nervously wondered what would happen to them should they too strike it rich. Then nationalist elements in Indonesia started asking why foreigners would be getting the lion’s share of the mine. Hasan-owned Gatra weekly ran stories that criticized the way officials were handling the case.

Suharto asked Hasan to sort out the mess. “He was the only one who could do it,” says the Hasan watcher. “No minister could deal with Barrick when they had someone like the president’s daughter with them.” Hasan engineered a deal that gave Bre-X 45% of Busang and closed the door on Barrick (see table above). Freeport-McMoRan of the U.S. -- Hasan’s partner in Irian Jaya -- got 15% and the task of preparing the mine for production by 2000 or earlier. The Indonesian government took 10%. And Bre- X’s Indonesian partners, PT Askatindo Karya Mineral and PT Amsya Lyna, ended up with 30%. Hasan had purchased half of these two private firms.

He used holding company Nusamba, which he heads, to purchase part of those 50% stakes. The timber tycoon owns 10% of Nusamba, Sigit has another 10% -- and the rest is held by Suharto foundations, including Supersemar and Darmais. Nusamba was also the vehicle for Hasan’s acquisition of 9.6% of Freeport. Jakarta had been awash with speculation about that deal because one-time Suharto favorite Aburizal Bakrie, who controlled Indocopper, the company that owned the Freeport shares, was allegedly reluctant to sell the firm. In the end, Nusamba paid $311.8 million for 50.5% of Indocopper.

In the early 1990s, Nusamba also acquired 8.83% of Astra from the founding Suryadjaya family, which was then deep in debt. Nusamba is by no means the biggest stakeholder in the automotive conglomerate. Logging baron Prajogo Pangestu’s Delta Mustika has 10.68%, while cigarette magnate Putra Sampoerna holds 14.67%. But with Suharto behind him, Hasan was easily voted Astra chairman last week. “We plan to concentrate on our core auto business, but we will also stay in agri-business, as we see a lot of growth there,” he says. “We have no plans to spin off any company.” Still, there are worries about what he will do with Astra’s investments in long-term businesses such as telecommunications. “We have to admit there is concern over where he is going to take us,” says a company official.

Nusamba’s entry into carmaking raises interesting questions since two Suharto sons are also auto makers. Hutomo Mandala Putra, known as Tommy Suharto, has a venture with Korea’s Kia Motors that makes the Timor, Indonesia’s national car, which ironically is produced in Seoul. Elder brother Bambang Trihatmodjo has his own auto company in partnership with Hyundai. He and other car producers complained when Tommy won exemptions for the Timor on import duties on components and a luxury tax. Hasan may try to settle the brothers’ differences by having Astra take over the national car program.

Foreign investors are closely following the maneuverings. The Mines and Energy Department is trying to reassure them. “It’s important that the shareholders who have taken the risks on the exploration efforts for Busang receive treatment in accordance with valid stipulations,” the agency said after the development deal was announced. But some are not convinced. “Hasan’s intervention may have been partly designed to dilute criticism of the way the president’s kids were being played off against each other, but the damage has been done,” says a Canadian mining analyst in Jakarta. “Toronto has been taking a good look at the influence peddling, and the overall impression isn’t good.”

With Hasan as peacemaker, squabbles among the president’s relatives may be easier to settle. It is a role the old family friend is eminently qualified to play. He first met Suharto in the 1950s, when the president was a young army officer. The son of poor ethnic Chinese parents, Hasan had been sent as a boy to live with the family of Maj. Gatot Subroto, who later became an important general. Suharto is said to have helped his friend win logging concessions. Hasan then diversified into plywood, pulp and paper, aviation, shipping, banking and publishing. Along the way, he advised Suharto’s children about their business ventures and even went into partnerships with some of them.

Now said to be worth more than $1 billion, Hasan seems to enjoy his new profile. At the press conference introducing him as Astra’s chairman, he joked and laughed with reporters, a marked contrast to the soft-spoken ways of his predecessor, Abdul Ramly. At one point, Hasan got a camera and took a picture of a journalist asking him a long question. “We need to buy good companies,” he said in answer to a query about Nusamba’s acquisition spree. And all in the aid of charity, he hastened to add. Not everyone believes him. But the self-assured Hassan is now at the pinnacle of power and influence. The question is what will happen to him when Suharto finally leaves the scene.


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