Suharto Kin Quit Firm Amid Fury Over Riches

Growing public resentment over the wealth amassed by Indonesia’s “first family” forced two Suharto family members out of top posts at a major corporation on Friday as demands escalated for investigations into the Suharto clan’s holdings.

As entrepreneurs on street corners hawked photocopied literature detailing the first family’s alleged corporate wealth, former President Suharto’s middle son, Bambang Trihatmodjo, and son-in-law Indra Rukmana stepped down under pressure from the board of Bimantara Citra, Indonesia’s sixth-largest firm.

Last week’s ouster of Suharto, Asia’s longest-ruling leader, has unleashed 32 years of pent-up fury over the extraordinary riches amassed by the president’s extended family. They are accused of using their political connections to gain lucrative monopolies and licenses and equity positions in profitable energy and infrastructure deals.

The mood here echoes the weeks following the 1986 ouster of the late Philippine strongman Ferdinand E. Marcos. Critics called for an investigation into the Suharto family’s wealth, a cancellation of questionable contracts and the return of any ill-gotten gains. In Washington, members of Congress urged the Clinton administration to look into any Suharto holdings in the United States.

Some observers described the response as a “witch hunt” and voiced fear that it could ultimately damage the economy even further. Said a leading Indonesian academic: “You could go overboard very quickly with this witch hunt and weaken the whole economy.”

The extent of the family’s holdings is news to many average citizens here, where Suharto strictly controlled the flow of information. But since he stepped down, news media have published details of how the Suharto family and close friends control an estimated 20% of the nation’s 200 leading firms and monopolize key manufacturing and distribution networks.

Public anger is particularly keen because the Suharto family’s extensive wealth--estimated at between $16 billion and $40 billion--is coming to light at a time when Indonesia faces its worst economic crisis in three decades.

“Can you imagine how many people that would feed?” asked an angry taxi driver, pointing to an Indonesia newspaper article on the first family’s fortunes.

Nor does the removal of Suharto family members from corporate boards resolve the problem. Though they have left Bimantara Citra’s board, Bambang and Indra--who is married to Suharto’s eldest daughter, Siti Hardiyanti Rukmana, also known as Tutut--remain the conglomerate’s two largest shareholders.

Bimantara Citra’s holdings include RCTI, the nation’s largest private television station; the Grand Hyatt Hotel in downtown Jakarta; the sole franchises for Nissan and Mercedes-Benz cars, and one of two exclusive contracts to handle the 1.3 million barrels of oil sold a day by Pertamina, the state-owned oil company.

Given the public discontent, members of the Suharto family, friends and business partners should be prepared for increased criticism and possibly even prosecution, according to Roderick Brazier, who just completed an extensive study of the first family holdings for the Castle Group, a Jakarta-based consulting group.

“Someone is going to be made an example of,” he said. Suharto “will be spared because many people believe he did much good for the country. In his case, the good outweighs the bad. But his kids, if they stay in the country, they will suffer.”

Also Friday, President B.J. Habibie loosened the tightly controlled political structure he inherited a week ago, saying that Indonesia will now allow formation of new political parties. The move addresses a key demand of protesters that average Indonesians have a political voice.

The government also announced steps to entice foreign capital back into the country, including simplified licensing procedures, greater freedom in choosing factory sites, and tax exemptions to manufacturers with high local content.

At the same time, Habibie’s own extensive family interests--including involvement in a controversial aircraft project and lucrative development deals on Batam island--are also under attack.

Meanwhile, U.S. and other foreign firms connected to Suharto family companies are lying low, fearful that they might get caught in the cross-fire. The foreign partners’ list for Suharto family firms reads like a who’s who of global players, including G.E. Capital, Lucent Technologies, Unocal, Ford, Siemens and Mitsubishi.

When most of these firms started getting serious about Indonesia in the 1980s and 1990s, having a well-connected Suharto family member as a partner was a necessary step in cementing the deal, particularly in the lucrative energy and infrastructure fields.

For example, G.E. Capital and Irvine-based Edison Mission Energy have stakes in the Paiton I power plant, whose local partner is Hashim Djojohadikusumo. Hashim’s brother, Lt. General Prabowo Soemitro Subianto, is married to Suharto’s middle daughter, Siti Hediyati Harijadi, known as Titiek.

Such arrangements are coming under scrutiny. Earlier this week, the new government led by Habibie, who has promised to rid his country of “collusion, corruption and nepotism,” canceled oil trading contracts held by Permindo, a Bambang-controlled company, and Perta, which has connections to another Suharto son, Hutomo Mandala Putra.

The Castle Group advises foreign companies to be straightforward about their Indonesian operations to avoid the appearance of collusion or wrongdoing. But for now, skittish U.S. firms are close-mouthed.

“We haven’t been commenting on that,” said Tony Zehnder, a G.E. spokesman, when asked about the impact of the anti-Suharto backlash on its Paiton I power plant. “G.E. tends to almost universally remain politically neutral.”

* EMPLOYMENT CRISIS: Indonesian President B. J. Habibie faces a daunting task in stemming the loss of jobs. D1