see also The Cost of Gold: The Hidden Payroll - Below a Mountain of Wealth, a River of Waste

The Jakarta Post Thursday, December 29, 2005

General Confirms Freeport Payments

Tiarma Siboro and Tony Hotland, The Jakarta Post, Jakarta

Former Trikora Military Commander in Papua Maj. Gen. Mahidin Simbolon has confirmed direct payments from U.S. gold miner Freeport-McMoRan to Indonesian military and police personnel guarding the firm's mine.

Mahidin said on Wednesday that the money from Freeport was used to support the military's logistical and other expenses, including meals, transportation, clothing and medication.

On-duty soldiers, said Mahidin, also received daily allowances, the total amount of which was set by Freeport.

Mahidin did not say whether such payments also protected the mining firm from any unwelcome intrusions by officials or environmentalists in connection with open-pit mining.

With the Freeport payments, the military benefits from extra income as the government also pays for soldiers' needs and basic expenses.

"The soldiers are deployed for security purposes to guard vital objects in the country. I suppose (U.S. oil firm) ExxonMobil is also paying the soldiers assigned to guard its site in Aceh.

"It might well be the case that Exxon is paying more than Freeport because the risks are more severe in Aceh," Mahidin said, referring to the Free Aceh Movement (GAM).

ExxonMobil spokesperson Deva Rachman admitted that the firm paid for security, but said that the money was paid to and fully managed by the government's Oil and Gas Regulatory Body (BP Migas).

Mahidin added, though, that such payments should not result in the military being seen as mercenary.

"We've been deployed to difficult areas. Don't we deserve better supplies?" he argued.

Mahidin, now the inspector general of the Army, denied ever having received part of the money, saying it was paid directly to the commander of the battalion guarding Freeport's mine.

This despite the fact that, during his tenure, he was the one responsible for determining the rotation of battalions.

Since Freeport commenced operations in Papua, the Indonesian Military (TNI) has stationed a battalion of troops from the Army's Strategic Reserves Command (Kostrad) at the mine on a rotating basis.

Each battalion is deployed for one year to protect the firm's 100-kilometer-long pipeline, which runs from Gezberg to the Portside area.

The mine taps one of the world's largest gold deposits, and contributes quite significantly to Indonesia's state revenue.

Mahidin is one of the senior TNI and police officers named in a new investigative report published in The New York Times on Wednesday as having received many thousands of dollars into their pockets.

In the report, which was based on authentic documents, Freeport paid nearly US$20 million between 1998 and 2004 to military and police generals, colonels, majors, captains, and also military units, to provide security at its mine.

Mahidin is listed as having received a whooping US$130,000 in 2002 in connection with what are described in the Freeport records as "military project plan 2002" and "humanitarian civic action project".

Since 2003, the report says Freeport has been paying the money to units instead of individuals, including the Mobile Brigade on more than $200,000 and the police with $1 million in 2003 for "monthly supplement payment", "administrative costs" and "administrative support" requirements.