Subject: Guardian Victory in Indonesia Arms Bribe Case [3 reports]
also: Guardian: Alvis: the president's family and the payoffs [Tank sale to Suharto's Indonesia was mired in corruption]; and British court orders release of files in Britain-Indonesia probe
The Guardian (UK) Thursday, December 9, 2004
Guardian Victory in Arms Bribe Case
David Leigh, David Pallister, Rob Evans, and John Aglionby in Jakarta
The high court yesterday ordered the release of files disclosing payments by a leading British arms company to the daughter of the then president of Indonesia in a landmark ruling for freedom of information.
Mr Justice Park ruled that the Guardian should be allowed access to the court file containing witness statements by the then chief executive of Alvis, a tank manufacturer based in Coventry.
It had been alleged that Alvis paid £16.5m in bribes to President Suharto's eldest daughter to secure a £160m sale of Scorpion tanks in the mid-1990s which were then used for internal repression.
Alvis attempted to keep the documents secret. But after hearing arguments over three days from Anthony Hudson, counsel for the Guardian, the high court ordered that the newspaper could have copies of the material.
The judge said the Guardian was a serious newspaper, and there was no reason why it could not have access to the court file.
The witness statements formed part of the evidence in an earlier, unreported case in which a former consultant to Alvis, Chan U Seek, claimed £6m commission on the tanks sale. "The proceedings between Alvis and Mr Chan were not a private arbitration. They were in open court, and unwelcome publicity for a defendant, including a successful defendant, is not uncommonly a consequence to any case," the judge said.
A large number of internal company memos were disclosed in the Chan hearing, including one from the chief executive referring to the payments to President Suharto's daughter as "a tax". She was referred to in company coded messages as "the lady".
But before the case could be reported, Alvis unexpectedly settled, with a confidentiality agreement that nothing further was to be said about the case. The witness statements handed over yesterday, and published on the Guardian's website today, reveal that Alvis executives tried for years to secure the support of influential people close to the government and the army.
Eventually they were able to hire President Suharto's eldest daughter, known as Tutut, along with another agent, the daughter of an army officer, to get the backing of the army.
The 100 Scorpion light tanks were sold with the promise from the Indonesian regime that they would not be used for internal repression. However, they were subsequently discovered in action in the breakaway province of East Timor and in Aceh. The sales were backed by the British government's Export Credits Guarantee Department, which was left to pick up a £93m bill when Indonesia ran into a financial crisis. President Suharto was ousted and Indonesia has asked to postpone payment of its debts.
Susan Hawley, of the anti-corruption campaign the Corner House, said the Export Credits Guarantee Department "should have spotted that the president's daughter was involved. Why didn't alarm bells ring?"
Tapol, the Indonesian human rights campaign, called for a full investigation by both British and Indonesian governments. Its spokesman said: "The allegations further strengthen the case for a freeze on British arms sales to Indonesia. This immoral and corrupt trade will do nothing to promote democracy or development in the country."
Alvis is now owned by BAE Systems. Richard Coltart, BAE spokesman, said: "We have no comment on this matter other than to point out that it relates to an Alvis issue before our ownership of the company."
Former president Suharto's daughter, Tutut, declined to comment on the allegations. An aide told the Guardian on condition of anonymity: "Of course Ms Tutut was involved in these deals but I'm sure she did nothing illegal."
Alan Rusbridger, the Guardian's editor, said yesterday: "This is an important judgment for the press. The judge has recognised that it's important that newspapers are free to cover court proceedings - and that, in the modern world, it's difficult, if not impossible, to do so without access to the court file.
"Journalists should now find it easier to view court documents, which is only appropriate on the eve of the introduction of a Freedom of Information Act."
The Guardian (UK) Thursday, December 9, 2004
Alvis: the president's family and the payoffs
Tank sale to Suharto's Indonesia was mired in corruption
Rob Evans, David Leigh, David Pallister and John Aglionby in Jakarta
Britain's controversial sale of tanks to Indonesia was a thoroughly corrupt transaction, according to the Alvis documents released yesterday to the Guardian.
If the deal were to take place today, it would be a criminal offence under recent legislation. Witness statements by Alvis executives describe in rare detail the way in which generals and members of ex-president Suharto's family were paid off.
The local agents were required to be Indonesian army family members. The proceeds had to be split with a company currently owned by the Indonesian military. And finally, to get the £160m required released from the impoverished country's budget, Suharto's daughter herself had to be recruited and rewarded.
The high court heard that £16.5m was paid into offshore accounts - a rake-off of around 10% of the deal's value.
"Madam Tutut", as Alvis's chief executive, Nick Prest, termed her, first appeared in London in February 1994, Alvis says. Mr Prest recorded that she met him and two other Alvis executives, Trevor Harrison and Lionel Steele.
"Her real name was Mrs Siti Rakhmana ... the eldest daughter of the then president Suharto ... She encouraged us to make arrangements with her associates to put a consultancy agreement in place. She provided her services through a company called Global Select."
Alvis plc signed the deal with her on May 4 1994, promising her money "to assist with sales of the Scorpion [tank]".
She turned up in England again two months later to visit the Alvis plant in Coventry with two army generals in tow, Lt Gen Hartoho and Lt Gen Mantiri.
"The purpose of this visit was to provide the armed forces with final reassurance concerning their commitment to Alvis before pressing the button," Mr Prest says.
Another Alvis executive, Lionel Steele, recorded that if the attention of the president's family was attracted to a deal, they "would automatically want to be involved in any large contract".
Alvis's local agent, Rini Soewondho, testified: "Arrangements for the presidential budget could only be made if they were supported by President Suharto. This usually meant seeking support from a member of his 'inner circle'."
Thanks to Tutut, the money came through to buy 50 brand-new light tanks, costing £1.6m each. Ironically, in view of the furore at the time in Britain about the use of the tanks to suppress rebels, there appears to have been no real military demand for such extravagant weapons.
Suharto, the documents reveal, was interested in the idea merely because he thought the army's existing armoured cars looked unimpressive.
The first sale was authorised by the Major government in Britain, after what Alvis's chief executive called "a lot of work ... in the light of the political antipathy". The export licence came through in March 1995.
Alvis then sought to exploit its Tutut channel to get a repeat big sale of Scorpions. A payment deal was signed through a fresh Tutut offshore vehicle, called Basque.
But this time there was a problem. "The Koreans ... were offering a competitive vehicle on generous credit terms. We were able to see off this competition ... Madam Tutut was instrumental in achieving this."
Despite the fact that the first Alvis shipment had been in such a rush that the tanks did not work properly, another £80m was found from the Indonesian treasury to buy 50 more of them.
Mr Steele records: "They had intended to purchase three battalions but at that point the Asian economic crisis took place, the Indonesian rupiah was devalued from 2,300 to 13,000 to the dollar and President Suharto was ousted.
"The new government had more urgent priorities than buying our vehicles".
The documents show that payment was made by Alvis at every level to make arms sales.
Their agents, Rini and her brother Didie, were children of a former top Indonesian army officer. "The minister of defence issued a directive," Rini records, "that the purchase of all defence equipment from foreign companies must be made through agencies ... owned by retired Indonesian military personnel (or a member of his family)".
Alvis duly signed up with their company PT Surya Kepanjen. Rini and Didie in turn put Alvis in touch with the deputy chief of staff of the army, Gen Sahallah.
According to Rini, the generals wanted their cut. "[Gen Sahallah] said a company named PT Truba would also have to be appointed." That company, Alvis's chief executive testified, "was owned by the Indonesia army".
The Guardian is publishing the key documents on its website today.
British court orders release of files in Britain-Indonesia probe: Daily
LONDON, Dec. 9 (AFP): A British court has ordered the release of files disclosing payments by a leading British arms company to the daughter of former Indonesian president Suharto, the Guardian newspaper said Thursday.
The High Court of Justice ruled that the Guardian should be allowed access to the court file containing witness statements by the then chief executive of Alvis, a tank manufacturer based in Coventry, it said.
The Guardian has reported allegations that Alvis paid 16.5 million pounds (US$31.9 million) in bribes to Soeharto's eldest daughter to secure a 160 million pound ($309 million) sale of Scorpion tanks in the mid-1990s which were then used for internal repression.
Alvis attempted to keep the documents secret, but the high court eventually ruled that the newspaper could have copies of the material, the newspaper said.
The witness statements formed part of the evidence in an earlier, unreported case in which a former consultant to Alvis, Chan U Seek, claimed six million pounds commission on the tanks sale.
A large number of internal company memos were disclosed in the Chan hearing, including one from the chief executive referring to the payments to president Suharto's daughter as "a tax," the Guardian said.
But before the case could be reported, Alvis unexpectedly settled, with a confidentiality agreement that nothing further was to be said about the case, the Guardian said.
The witness statements handed over Wednesday, and published on the Guardian's website (www.guardian.co.uk), reveal that Alvis executives tried for years to secure the support of influential people close to the government and the army, it said.
Eventually they were able to hire president Suharto's eldest daughter, known as Tutut, along with another agent, the daughter of an army officer, to get the backing of the army.
The 100 Scorpion light tanks were sold with the promise from the Indonesian regime that they would not be used for internal repression. However, they were subsequently discovered in action in the breakaway province of East Timor and in Aceh, the Guardian said.
The sales were backed by the British government's Export Credits Guarantee Department, which was left to pick up a 93 million pound bill when Indonesia ran into a financial crisis, it said.
President Suharto was ousted and Indonesia has asked to postpone payment of its debts.
Paul Barber TAPOL, the Indonesia Human Rights Campaign, 25 Plovers Way, Alton Hampshire GU34 2JJ Tel/Fax: 01420 80153 Email: email@example.com Internet: http://tapol.gn.apc.org Defending victims of oppression in Indonesia, 1973-2004
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