Investments at risk as British firms face costly fallout from upheaval in Indonesia

Once-vital links to the Suharto clan may now prove a liability for UK businesses. Steve Boggan and Mark Oliver report
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The Independent Online
SOME of Britain's biggest companies were yesterday identified as having interests in Indonesia with links to former President Suharto or his cronies.

Projects worth hundreds of millions of pounds were secured by teaming up with companies linked to the president's six children or his closest friends - but now many of these are coming under scrutiny from the new government.

Thames Water has already had a pounds 225m project to supply water to half the population of Jakarta suspended and questions have been raised about the future security of PowerGen's role in a pounds 1.065bn power station project in east Java.

Suharto's eldest son, Sigit, controls a company which Thames had to go into partnership with, while PowerGen's partner was part-owned by another of the former president's sons, Bambang.

These companies, however, are not alone in having links that were once advantageous but are now potentially disastrous. According to information compiled by the Indonesian human rights campaigners Tapol, there could be many more.

Rio Tinto is a shareholder in PT Freeport Indonesia, which runs a $3bn copper and gold mining operation in Irian Jaya. Another Freeport shareholder is a company 80 per cent controlled by Suharto-controlled charitable foundations, with the remaining 20 per cent divided up between Suharto's son Sigit and his golfing partner Bob Hasan.

The company said it had not deliberately allied itself to any Suharto family or friends and was committed to long-term investment in the region without becoming involved in politics. "We are, and always have been, completely and utterly neutral as for as politics go," a spokesman said.

BP owns 51 per cent of Indonesia's first polyethylene plant, PT Peni. Sigit owns 9 per cent of the company while Bambang controls a company which has secured a five-year contract to supply the plant with half its ethylene requirements.

BP said it was not concerned about the operation's links to the Suharto family. A spokesman described the deal as a normal commercial investment.

Rolls-Royce's agent in Indonesia is PT Mahasarana Buana, a company owned by Suharto's youngest son, Tommy. Rolls-Royce engines are used in the Hawk aircraft and the N-25- passenger planes manufactured by the state aircraft company IPTN, which was headed by BJ Habibie before he became president. IPTN also services the Rolls-Royce Trent engines used in the Airbus A-330 planes flown by the state carrier, Garuda. Rolls confirmed that it was involved in the projects attributed to it by Tapol, but refused to confirm the identity of its agent.

Taylor Woodrow is involved in building a $1.2bn light railway in east Java with GEC Alsthom and a third partner, the Bimantara Group, Tapol claims. Bimantara is controlled by Bambang.

Last night, Taylor Woodrow said GEC Alsthom had signed a letter of intent with an Indonesian company in October 1996 and they had come on board a year ago. Neither company would confirm the Indonesian company was the Bimantara Group.

A Taylor Woodrow spokesman said: "We are obviously aware of the political situation but we are a well established company, and have been involved in Asia for 40 years."

The Bank of Scotland is investing pounds 5.5m in a huge papermill project in south Sumatra. One of the other investors, with a 16 per cent stake, is PT Trodden Satriaputra, which is owned by one of Suharto's daughters, Tutut.

The bank's annual report said its exposure in the entire South-east Asia region amounted to only 0.17 per cent of its assets. A spokeswoman said the figure quoted by Tapol represented a commitment to lend over the next two years, only a fraction of which has been extended so far.

In 1994, United Biscuits launched a joint venture with the Salim Group to build and run a biscuit factory in west Java. The Salim Group, which has a 50 per cent stake in the project, is owned by Liem Sioe Liong, Suharto's closest friend.

The company said it was anxious to see the project continue successfully but its corporate exposure was "virtually nil".