Indonesia has been rocked by extraordinary revelations about top-level negotiations with one of the world’s most profitable mining companies, Freeport-McMoRan, which operates in the high mountains of West Papua province.
A leaked recording of an informal meeting has exposed the then chair of Indonesia’s national parliament, Setya Novanto, and oil tycoon Riza Chalid attempting to secure by gift a $US4 billion ($6.1bn), 20 per cent stake in Freeport’s mines, plus a proposed hydro-electric power plant.
The scandal, denounced as the worst to hit Indonesia, has incited demands for a thorough public investigation. At the heart of the row is Freeport’s desire to quickly secure an extension of its contract — which expires in 2021 — for control of one of the biggest gold and copper mines in the world.
With most of its global gold production coming from Indonesian mines — containing reserves estimated to be worth at least $US40bn — Freeport-McMoRan has deployed such powerful allies as former deputy head of national intelligence Maroef Sjamsoeddin as local executive director to help Freeport navigate through Indonesia’s corrupt politico-business environment and negotiate contract renewal.
In Indonesia’s highly competitive money politics, a large stake in Freeport is the ultimate prize for the successful political party and faction to gain slush funds. The Freeport scandal can best be understood as a contest between two political gangs.
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