Slate: How did Suharto steal $35 billion
By Brendan I. Koerner
Posted Friday, March 26, 2004, at 5:56 PM ET
Mohamed Suharto has received a dubious honor from Transparency International, which named the former Indonesian
president the most corrupt world leader of the past 20 years. With his family's takings estimated at between $15
billion and $35 billion, Suharto topped such notorious kleptocrats as Ferdinand Marcos of the Philippines ($5 billion
to $10 billion) and Nigeria's Sani Abacha ($2 billion to $5 billion). How did the longtime Indonesian strongman
amass his wealth?
Through a system that his political opponents called KKN, the Indonesian acronym for "corruption, collusion,
nepotism." Suharto handed control of state-run monopolies to family members and friends, who in turn kicked
back millions in tribute payments. Those payments were usually cloaked as charitable donations to the dozens of
foundations overseen by Suharto. Known as yayasans, these organizations were supposed to assist with the constructions
of rural schools and hospitals but instead functioned as Suharto's personal piggy banks. Doling out millions to
one of the foundations was simply part of the cost of doing business in Indonesia during much of Suharto's 32-year
reign. Financial institutions were ordered to contribute a portion of their annual profits to a yayasan, for example,
and wealthy Indonesians were expected to "tithe" a certain percentage of their salaries.
The charitable foundations were only the tip of the KKN iceberg. In order to exploit Indonesia's natural resources,
companies had to enlist the aid of a Suharto crony—usually one of his children—in order to get through the bureaucratic
red tape. In return, the cronies expected an equity stake in the enterprise, without putting forth any monetary
capital. When Jakarta's water system was privatized in the mid-1990s, for example, one of the winning bidders had
to give Suharto's son, Sigit, 20 percent of the venture's shares. Sigit's involvement with the company amounted
to showing up for the contract-signing ceremony. |
