Is a US Mining Company Funding a Violent Crackdown in Indonesia?
December 6, 2011
Samantha Michaels / The Atlantic
Freeport-McMoRan, the Phoenix-based American mining company, was been forced to halt mining the world's richest copper and gold deposits when 8,000 workers staged a strike for better wages. Independent investigations have revealed that Freeport has been paying millions of dollars directly to the local police officers who guard its mine, although this police force has a history of brutality and corruption.
JAKARTA, Indonesia (November 29, 2011) -- Up in the remote mountains of West Papua, Indonesia, a road winds along steep cliffs, tall trees, and security checkpoints to the world's richest copper and gold mine. More than four thousand meters above sea level, the mine is said to be so high that its mining trucks must be tracked via satellite, as clouds typically cloak them from view.
Adding to the isolation, the American mining company, Phoenix-based Freeport-McMoRan, rarely allows visitors to enter its facilities. The access road is for official vehicles only, and foreign journalists are almost exclusively forbidden.
Yet despite its cover, Freeport's giant Grasberg mine is on high alert. Production there has ground to a near halt as 8,000 workers strike for better wages, currently set between $1.50 and $3 an hour. Now in its third month, this strike is not only the longest in Indonesian mining history, but also one of the more violent, with sabotage to pipelines and deadly attacks on company employees.
"We don't feel secure to work at Freeport or to travel between the mine and our homes," said Juli Parorrongan, a spokesman for the All Indonesian Workers Union, which organized the strike. "Too many people have been killed, but we don't know who's shooting us. We need the police to protect us."
Freeport-McMoRan is one of the world's largest mining companies, with interests across the globe and just under $19 billion in revenue in 2010. The Grasberg mine, which holds the world's largest gold reserves, has been so profitable that Freeport is the Indonesian government's biggest single taxpayer, with about 1.75 billion in taxes and royalties last year alone. An analyst for Forbes.com projected the protests may cost the firm $250 million in revenue; a company spokesperson cited daily losses of $18 million to $19 million.
The strikers have a reason to be wary for their safety: Freeport is paying millions of dollars directly to the police officers who guard its mine, although Indonesia's police force has a history of brutality and corruption. When the National Police chief admitted to these payments last month, he called it "lunch money," writing it off as "operational funding given directly to police personnel to help them make ends meet."
A 2005 investigation by the New York Times found that individual military commanders had received tens of thousands of dollars, in one case up to $150,000, from Freeport. Ironically, the mining company allowed the officers to eat lunch (and breakfast and dinner) in the company mess hall.
Rights organizations fear the security payments are tainting police neutrality in the region, creating a conflict of interest for officers who are legally bound to protect the Indonesian people. "If they receive money from Freeport, it means their boss is not the Indonesian government, but rather Freeport -- a private company," said Poengky Indarti, executive director of the Indonesian Human Rights Monitor. "With this money, we worry that police tend to protect Freeport rather than protecting the workers."
In October, police officers opened fire on striking Freeport workers who were trying to board Freeport buses from the nearby town of Timika to demonstrate by the mine's gate. One striker died from gunshot wounds, at least six were injured, and a security officer later died from injuries sustained in the clash.
Freeport has given $79.1 million to police and military forces in the past 10 years, according to a group called Indonesian Corruption Watch. Most of that funding has been through in-kind contributions such as food, housing, fuel, and travel costs, but officers have also received direct payments. A report by the NGO Global Witness shows that, between 2001 and 2003, Freeport gave nearly $250,000 to a controversial commander who in 1999 led military action in East Timor, where soldiers killed more than a thousand people.
Since then, the security funding has grown: Freeport's financial documents show that the company paid $14 million to support government security forces in 2010, up from $10 million in 2009 and $8 million in 2008.
Eric E. Kinneberg, Director of Communications for Freeport, wrote in an email, "This provision of support is consistent with our obligations under our agreements with the respective governments, our philosophy of responsible corporate citizenship and the Voluntary Principles on Security and Human Rights. We periodically review our support practices to ensure that they are appropriate, lawful and properly controlled."
Of the 2010 funding, he emphasized that "approximately 80% of that amount is non-cash, in-kind support" that is "necessitated by the remote posting."
The Guards of Grasberg
Even under normal circumstances, Freeport's Grasberg mine requires an unusually high level of security. Situated in the restive province of West Papua, the mine has long been a site of mysterious shootings by unidentified gunmen, and instances of violence have risen since the strike began in September.
On November 18, gunmen wounded three police officers and killed a security officer with a shot to the head. Since early October, at least four workers and two residents have also been shot and killed by unknown gunmen near the main road.
The police say they cannot afford to protect the mine without money from Freeport, which has reported a security team of 725 company guards and 3,000 government guards. "We cannot fully equip our members [assigned to guard Freeport] or provide patrol cars. But Freeport said they could and didn't mind," National Police spokesman Senior Commander Boy Rafly Amar told the Jakarta Globe, where I work as a copy editor and reporter.
Back when Freeport set up its Grasberg operations in the late 1980s and early 90s, soldiers received a wage below the poverty line. They were encouraged to pursue local business ventures to supplement their incomes, but some exploited the local population and engaged in illegal practices, such as panning gold from the Freeport area and promoting prostitution in nearby towns.
"Such military activities would adversely impact [Freeport] employees and the surrounding community," said Prakash Sethi, head of the New York-based International Center for Corporate Accountability, who traveled to West Papua between 2002 and 2007 to conduct an audit of the Grasberg mine's operations at Freeport's request.
The project allowed Sethi and a team of experts a rare look into the mining facilities, as well as access to interviews with company workers, community members and management. "It is my interpretation that … because the military did not have adequate facilities at the mine site, Freeport agreed to provide the military with 'largely' in-kind support in terms of housing and eating facilities," Sethi wrote in an e-mail, adding that his audit did not examine how the military used those funds. "At the same time, some funding was provided for 'miscellaneous expenses.'"
That interpretation seems to be supported by a statement in Freeport's filings with the US Securities and Exchange Commission in 2010: "From the outset of PT Freeport Indonesia's operations, the government has looked to PT Freeport Indonesia to provide logistical and infrastructure support and assistance for these necessary services because of the limited resources of the Indonesian government and the remote location of and lack of development in Papua."
The Problem with Pocket Money
In April, Papua Police's chief of operations sent a letter to a local rights organization, the Commission for Missing Persons and Victims of Violence, which states that security allowances were not just "incidental and administrative," and that each police officer receives $140 in direct payments every month.
The National Police has since confirmed and defended Freeport's monthly allowances. "That's only Rp 40,000 [$4.42] a day. Even if they want to spend it, the nearest shop is two and a half hours down the mountain," police spokesman Boy Rafly Amar told the Jakarta Globe. Another police spokesman said police otherwise make only Rp 53,000 in a month, or $5.86.
It is unclear exactly how the payments are made, or how security forces use the funds. According to Sethi, Freeport used to give money to security commanders because lower-level officers lacked bank accounts, and then the commanders distributed the payments themselves. "The question was, how much was actually given to the soldiers and how much was kept by the commanders in the headquarters?" said Sethi. "I don't know, and I think the company doesn't know. If you ask the question, it would look like you're insulting the professionalism of the commanders."
In addition to creating a conflict of interest for officers during the labor strike, activists worry the money helps perpetuate human rights abuses in the region, as the police and military attempt to stamp out the separatist movement. Papua formally joined Indonesia in 1969 after 1,024 Papuans voted unanimously to relinquish their sovereignty during a UN referendum (though Papuans allege that the representatives, hand-picked by the Indonesian government, were held at gunpoint during the vote).
As Papuans in the region continue to fight for independence, Human Rights Watch has accused security forces of engaging in a number of rights abuses, including extrajudicial killings and torture.
Police and military officers -- who rely on Freeport for funding and equipment -- say they would not be able to perform their security operations in the region without the American company's support. In that same vein, activists argue that without Freeport, these officers would not be able to suppress the rights and independence aspirations of the Papuans to the extent that they do now.
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