TNI’s Gold Mine: Corruption and Military-Owned Businesses in Indonesia

The Grasberg Mine, located close to the highest mountain in West Papua, Indonesia, is the world’s largest gold mine and third-largest copper mine. The mine, owned by the corporation Freeport-McMoRan Copper & Gold, has been the site of strings of grave human rights abuses, linked to Indonesia’s own National Armed Forces (Tentara National Indonesia/TNI). TNI’s presence in the territory is ostensibly to protect the mine, and Freeport’s Indonesian subsidiary acknowledges having made payments of as much as US$4.7 million in 2001 and US$5.6 million in 2002 for such government-provided security. A report by Global Witness, however, revealed numerous other payments ranging from US$200 to US$60,000 that Freeport Indonesia allegedly made to individual military officers.

The TNI’s sale of security services to companies like Freeport is only one of the many business ventures conducted by the TNI and its officers. As Human Rights Watch has reported, the Indonesian military has been supplementing its income through both its formally established companies, and through informal and often illicit businesses such as black market dealing. Moreover, the military’s business activities (both lawful and unlawful) are largely shielded from public scrutiny: budgeting for military purposes is generally kept secret, and TNI members generally refuse to answer questions about institutional spending.

Military-owned business in Indonesia are problematic, not only because this private-sector activity impedes military professionalism and distorts the function of the military, but also because it also contributes to crime, human rights abuses, and especially corruption. This problem is greatly compounded by the fact that TNI officers generally enjoy immunity from corruption charges brought by civilian institutions. In fact, the Transparency International’s Defense and Security Program has deemed Indonesia one of the countries most prone to corruption in its defense and security institutions. It is therefore appalling that this issue has not been addressed more seriously by the Indonesian government. Although a 2004 law mandated the transfer of control over TNI businesses to the civilian government within five years, the law did not clearly specify which types of business activities were covered, and this legal loophole enabled the TNI to preserve many of its moneymaking ventures, including TNI’s infamous security services—to say nothing of already-illegal criminal enterprises and illicit corporations. Moreover, despite the five-year timetable in the law, the government has been notably reluctant to enforce the transfer of ownership, making repeated excuses alluding vaguely to the need for the TNI to compensate for the lack of budgeting for security purposes. As a result, despite some efforts to reform the way the TNI is allowed to handle its businesses, military-owned businesses in Indonesia continues to flourish, with the Indonesian people of Indonesia having to pay the price.

The government’s weak response towards the military’s non-compliance with the 2004 law is merely one of the many indicators of how impervious the TNI’s power and seeming impunity. There are factors that contribute to this impunity, along with the corresponding corruption and abuse of power in the operations of military-owned businesses: Continue reading

Can’t See the Forest Because of the (Missing) Trees: How Satellite Imagery Can Help Fight Illegal Logging

Illegal logging is one of the gravest threats to the environment, and to the people (and countries) that depend on forest resources. Global Witness’s 2013 Annual Review describes industrial logging as a force that “drives land grabs, promotes corruption, contributes to climate change, fuels conflict and human rights abuses, and threatens over one billion people who rely on forests for their livelihoods and well-being.” The problem has been documented with surprising depth. Prominent examples include investigative work done by Global Witness (including two short films, Inside Malaysia’s Shadow State, which shows undercover interviews with members of then-Chief Minister of Sarawak Taib Mahmud’s family and legal team advising a “foreign investor” how to use bribery and fraud to illegally clear land for a palm oil plantation, and Rubber Barons, which documents land grabbing by a Vietnamese rubber firm), as well as other groups like the Environmental Investigation Agency, which recently recounted how army officials protect Chinese loggers’ passage into Myanmar, despite new laws entirely banning foreign exports of logs. In the popular media, NPR’s All Things Considered and The New Yorker looked at illegal logging in Russia and allegations of its yield being sold by major U.S. retailers, while The Economist called out HSBC’s involvement with dirty loggers. The issue is not confined to developing economies—a World Bank paper enumerated the breadth and variety of possible illegal acts surrounding the logging industry and its products worldwide, noting that practically all involve corruption. The problem, then, appears well-known and reported but remains widespread, possibly getting worse.

Illegal logging remains persistent largely because of pervasive corruption. A number of proposals have already laid out systems to address forestry corruption. Possibilities include land tenure arrangements that give management to local or indigenous groups, certification schemes for wood products, and a variety of monitoring and transparency mechanisms. A 2009 World Bank report provided a “comprehensive framework” involving five principal parts, each with a number of sub-components. Scholars, NGOs, and international organizations have noted the need for technology to increase monitoring capabilities. Technological developments may offer the key to progress in the fight against illegal logging—allowing circumvention of (or greater pressure on) the corrupt government officials who ignore, or sometimes participate in or profit from, the unlawful destruction of forests.

A previous post discussed one such technology, isotope provenancing, used to identify the origin of wood. This technology, however, has its limits. (For example, it does not help when forests are razed not to harvest the timber, but to clear the land for other uses, such as palm oil and rubber plantations.) Other new technologies can help show how corruption in the logging industry happens, working forward from the site of the problem instead of tracing back from imported products. One of the most promising tools—satellite imaging—is in fact already available, and could be very effective if deployed more appropriately and aggressively.

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