In Confessions of an Economic Hit Man I describe my connection in the late 1980s and 1990s with Stone and Webster Engineering Company (SWEC), at that time one of the nation's largest and most respected consulting and construction firms, and the fact that I was paid about a half million dollars by SWEC with the understanding that I would desist from writing a book about my EHM life. Occasionally, the company asked me to actually perform a service for them.
One day in 1995, a high-level SWEC executive called to request a meeting with me. Over lunch, he discussed a project to construct a chemicals processing complex in Indonesia. It would be, he assured me, one of the largest projects in the company's one- hundred-year history, worth about $1 billion. "I'm determined to land this one," he said and then, lowering his voice, admitted, "but I can't do it until I figure a way to pay one of Suharto's family members $150 million."
"A bribe," I responded.
He nodded. "You've spent a lot of time in Indonesia. Fill me in on how to make this happen."
I told him that I knew of four ways to pay the man a "legal bribe." SWEC could arrange to lease bulldozers, cranes, trucks, and other heavy equipment from companies owned by him and his friends and pay excessive fees; they could subcontract portions of the project to similarly owned companies at inflated prices; they could use that same model to contract for food, housing, cars, fuel, and other such items; and they could offer to arrange for the sons and daughters of the Indonesian's cronies to attend prestigious U.S. colleges, cover all their expenses, and pay them consultant or intern salaries while they were in the United States. Although I acknowledged that arranging for such a large sum would probably require all four approaches and would take several years, I assured him that I had seen all of these schemes used very successfully and was unaware of any legal actions ever taken against a U.S. company or its executives as a result. I also suggested that he explore the idea of retaining geishas to help seal the deal.
"The geishas," he informed me with a conspiratorial grin, "are already hard at work." As to the rest, he expressed concern that Suharto's man wanted "cash up front."
I had to admit that I knew no way to make such amounts of cash available "up front." At least not legally.
He thanked me. I heard nothing further from him on this issue.
A decade later, on March 15, 2006, The Boston Globe carried the following banner headline across the front page of its Business section: THE 'BRIBE MEMO' AND COLLAPSE OF STONE & WEBSTER. The article told the tragic story of how the company's glorious
history, which began in 1889, came crashing to an end when it filed for bankruptcy in 2000 and ended up owned by the Shaw Group. According to the Globe, "well over 1,000
employees were fired, their savings in Stone & Webster stock lost." Globe reporter Steve Bailey concluded that the downfall could be traced to "The critical memo (that) lays out in detail a previously unreported secret attempt by the company to pay an illegal $147 million kickback to a relative of Indonesian President Suharto to secure the largest contract in Stone & Webster history."12
The second incident started with an e-mail I received from the son of an Indonesian government official whom I had worked with during the 1970s, requesting a meeting with me.
Emil (not his real name) joined me at a quiet Thai restaurant on New York's Upper West Side. He told me that he had been deeply moved by Confessions of an Economic
Hit Man. His father had introduced him to me in Jakarta when he was about ten years old.
He remembered hearing my name often. He knew, he said, that his father was one of those corrupt officials I described in my book. Then, looking me squarely in the eye, he admitted that he had followed in his father's footsteps. "I want to come clean," he told me. "I want to confess, like you." He smiled softly. "But I have a family and a great deal to lose. I'm sure you understand what I mean."
I assured him that I would never divulge his name or in any way expose his identity.
Emil's story was a revealing one. He pointed out that the Indonesian military has a long history of collecting money from the private sector in order to finance its activities. He tried to make light of this, shrugging it off with a laugh, observing that such activities were common in Third World countries. Then he grew serious. "Since the fall of Suharto in 1998, things have gotten even worse. Suharto was truly a military dictator who was determined to keep the armed forces under his control. Once his reign ended, many Indonesians tried desperately to change the law so that civilians would have more power over the military. They thought that by reducing the military budget, they could accomplish their objectives. The generals knew where to go for help: foreign mining and energy companies."
I told Emil that his words reminded me of similar situations in Colombia, Nigeria, Nicaragua, and so many other countries where private militias are used to supplement national armies.
"Yes," he agreed. "We've got many mercenaries in Indonesia. But what I'm talking about is worse. In the last few years, our army's been bought out by foreign corporations. The implications are frightening because, you see, these corporations now own our
armed forces as well as our resources."
When I asked him why he was divulging this information, he turned away and looked outside the window of the restaurant at the passing traffic. Finally, his eyes returned to meet mine. "I'm a collaborator. I've taken my father's corruption a step further. I'm one of the people who make the arrangements, collect the money from companies, and pass it on to the military. I'm ashamed. The least I can do is talk to you and hope you let the world know about what's going on."
Weeks after my meeting with Emil, an article caught my eye as I scanned The New
Freeport-McMoRan Copper and Gold, that made "payments of $20 million to military commanders and units in the area (Papua) in the last seven years in exchange for protection of its facilities in the remote province."
The article went on to assert that, "Only one-third of the financing for Indonesia's armed forces comes from the state budget, while the rest is collected from nontransparent sources such as 'protection payments,' allowing the military brass to operate independently of the government's financial controls."13
That article led me to two others that had appeared on The Times Web site in September 2004. They described recent events in my old stomping ground, Sulawesi, documenting allegations that the world's largest gold-producing company, Newmont Mining Corp., based in Denver, was illegally dumping arsenic and mercury into the ocean at Buyat Bay. As I read these articles, I realized my work—the electrical systems, roads, ports, and other infrastructure that we EHMs financed and built back in the 1970s—had created the conditions that enabled Newmont to conduct its mining activities and poison the ocean. As my project manager, Charlie Illingworth, pointed out on my first trip, we were dispatched to Indonesia to make sure the oil companies got everything they needed; it did not take long for me to understand that our mission was not limited to oil companies. Sulawesi was a prime example of how "aid" money benefits the multinationals.
The Times article pointed out that "the fight with Newmont has fueled a growing popular impression that mining and energy companies hold a tight grip over Indonesia's weak regulatory system. Many blame the corruption, cronyism and unevolved legal structure inherited from General Suharto, the dictator whose rule ended in 1998 and who, for a price, eagerly opened the doors to foreign investors."14
As I stared at those articles, the allegations by the mayor of "Batsville" and the Bugi shipbuilder superimposed themselves over my computer screen, like biblical prophets come back to haunt me. The United States had indeed sent its bats off to exploit and pollute foreign lands. Sailors on ancient wooden galleons, armed with machetes, had little chance of defending their homeland against the might of the Pentagon.