Some notes on the background of the Lippo-Clinton connections
- by George J. Aditjondro, October 18, 1996


A. The Lippo-Suharto family business links

First of all, let me list the joint ventures (jv) of the Lippo Group with the Suharto family in Indonesia.

Bank Central Asia (BCA): The largest private bank in Indonesia, part of the Salim Group, the largest conglomerate in Indonesia, which is controlled by Indonesia's richest business tycoon, Liem Sioe Liong, who is also Suharto's closest crony. BCA, however, owes its success to Mochtar Riady (Lee Mo Sing), who joined the bank in 1975 at Liem Sioe Liong's invitation, and obtained a 17.5% share in BCA. Two other important shareholders in BCA, who jointly owned 30% of the bank's shares are Siti Hardiyanti Rukmana and Sigit Harjojudanto, Suharto's eldest daughter and son. When Mochtar Riady left BCA in the late 1980s to create his own business empire, the Lippo Group, his shares in BCA were reduced, while the shares of the Suharto siblings were increased to 35%. So, Mr. Riady and the Suharto family have a long history of joint ownership in this bank. And when the Liem Sioe Liong family and the Riady family began to concentrate on their respective Salim and Lippo Salim and Lippo conglomerates, the business partnership between the Lippo Bank and BCA still continues. James Riady, the Lippo "crown prince", has transformed the New York branch of the Arkansas-based Worthern Bank - which shares the Riady had bought in the 1980s -- into a BCA branch.

BCA itself, has set up a couple of joint ventures with other financial institutions all over the world, such as the Chemical Bank and Jardine Fleming in the USA and the Long Term Credit Bank of Japan.

(source: Eddy Soetriyono, n.d. Kisah Sukses Liem Sioe Liong. Jakarta: Indomedia, pp. 47, 63; A Study of Top-300 National Private Business Groups in Indonesia, 1991-1992. Jakarta: PT CISI, pp. 44-64;Info Bisnis , 1994 Special Edition, p. 99; Gatra , Febr. 4, 1995: 89).

PT Mandara Permai: A real estate complex in Tangerang, east of Jakarta: jv with the Salim Group, where the interests of the Suharto clan is represented by Sudwikatmono, Suharto's cousin.

(source: Info Bisnis , May 1994: 12, July 1994: 6;Properti Indonesia , Oct. 1994: 23; Soetriyono, n.d.: 116).

PT Lippo Life Insurance: Fifth largest insurance company in Indonesia: jv with Sudwikatmono, Suharto's half-brother, who is also a major shareholder in the Salim Group.

(source: Info Bisnis , May 1994: 6, Special Edition 1994: 97)

PT Marga Pusaka: An insurance company, set up in 1984, as a fifty-fifty jv between Lippo Indah Trading and Anthony Salim, Liem Sioe Liong's "crown prince" in the Salim Group.

(source: Soetriyono, n.d.: 63, 117).

Bank Umum Asia: The Riady family is also heavily involved in this bank, which is often been listed under the Salim Group. Mochtar Riady and his two sons, Andrew Taufan Riady and Stephen Tjondro Riady, jointly own nearly 50% of the shares of this bank, while Liem Sioe Liong and his two sons, Anthony Salim and Andre Halim, jointly also own nearly 50% of the shares of this bank.

(source: Soetriyono, n.d.: 63).

PT Royal Sentul Highlands: First class real estate and shopping centre, on 2,000 Ha of land, near Tommy Suharto's Sentul car racing circuit in Bogor, south of Jakarta; jv of Lippo Group through PT Gasentra Businesspark (20%) with Bambang Trihatmojo (30%), Suharto's second son, and other business partners.

(source: Swasembada , August 1996: 40, 45)

Sahid Lippo International Hotel: Four-star hotel in Lippo City, Bekasi, south of Jakarta: jv with Sukamdani Sahid Gito Sardjono, a cousin of the late Mrs. Tien Suharto: this hotel was inaugurated in August 1994.

(source: Info Bisnis , July 1994: 13-14, 19;)

Siloam Gleneagles Hospital: This high-class hospital is being constructed in Lippo City, prior to obtaining a permit from the Health Department of Health; this US$ 70 million investment is a jv with the Singapore-listed Parkway Holdings. This leading regional healthcare group is owned by the Sino-Malaysian entrepreneur, Vincent Tan, his close friend Mohkzani Mahathir, second son of Malaysian Prime Minister Mahathir Mohamad, and Indonesian entrepreneur Johannes Kotjo, and other business interests. Kotjo himself is a business partner of Bambang Trihatmojo in various Singapore-listed companies. Meanwhile, a similar Gleneagles hospital is also being built in Medan, North Sumatra, by Probosutedjo, Suharto's half-brother, and a Sino-Indonesian businessman, Kaharuddin Ongko, with a 60% share of the Singapore-based healthcare group.

(source: Indonesian Business Weekly , April 22, 1994: 38;Sinar , Oct. 21, 1995: 17; The Bulletin , Febr. 6, 1996: 48, Oct. 9, 1996: 53).

From all this business links, and probably many others which I have not been able to unravel, it can be concluded that the Riadys do have close connections with the extended Suharto family, although they have not "advertised" those close connections as publicly as the Liem Sioe Liong family.

This access to Suharto has also been enhanced by the fact that the Lippo Group has a very well-connected person as the executive director of its Lippo Investment Managament (LIM) unit, namely Didier J. Lemaistre. This French-born financial executive, who was brought into Lippo by Mochtar Riady in 1988 and assigned to that important position in 1991, is a member of the powerful Djojohadikusumo family. One of his brothers-in-law is Dr Soedradjat Djiwandono, the governor of Indonesia's central bank (Bank Indonesia), another one of is the rising army star, Mayor Gen Prabowo Subianto, commander of Kopassus , the Indonesian army special force, and another one is the rising business tycoon, Hashim Djojohadikusumo (Prospek, May 8, 1993: 80-81).

Hence, it is difficult to imagine, that the Lippo connections with the Clinton Administration are not also influenced by the Suharto interests in the (public) political as well as (private) economic domains.


B. Mochtar Riady's first attempt to enter the US financial market:

Prior to buying the Worthern Bank's shares in Arkansas, which eventually led to the close relationships between the Riadys and close financial friends of the Clintons, Mochtar Riady had already attempted, unsuccessfully, to become an important player in the US financial market. That move took place during the Carter Administration, in 1977, when at the age of 47, Mochtar Riady offered to buy 200,767 shares owned by Bert Lance in the National Bank of Georgia.

Bert Lance, at that time, was an important financial official under the Carter Administration, and was in personal financial difficulties, due to unfavorable banking practices (e.g. overdrafting). Mochtar Riady saw that as a chance to get into the US financial (and possibly, political) arena, and ask the favour of an intermediary, Robert B. Anderson, to buy Lance's shares. He tried to buy those shares via the Chemical Bank of San Francisco, which was a joint venture partner of BCA in PT Multicor, and wrote a letter of intent to Lance. Unfortunately for Riady, at that time, the US media got to know about this plan, and Riady's name was splashed over the newspaper pages.

Only five years later did Mochtar Riady's plan, at that time still on behalf of BCA, to take over a US bank, succeeded. The target was the Hibernia Bank in San Francisco, which had since the beginning of the New Order handled the financial arrangements of the sale of US wheat to Indonesia. It was no coincidence, that this bank was chosen, because another Liem Sioe Liong-Suharto (Salim Group) venture, the Bogasari flour mills, had had the monopoly of milling the US wheat exported to Indonesia under the PL 480 subsidy to American wheat farmers (Soetriyono, n.d.: 55-57).

In other words, the take over of Hibernia Bank by BCA strengthened the Salim Group's control over -- and thereby, income from -- the American wheat exported to Indonesia under a subsized price. With its monopoly over flour milling, the Salim Group eventually advanced its monopoly over Indonesia's instant noodle market, and has now become the largest exporter of this traditionally East Asian specialty.

The take over of Hibernia Bank, however, did not bring Mochtar Riady -- and his political backer in Indonesia -- closer to the White House, assuming that that was still his political agenda. This probably explains, why after his unsuccessful bid to buy a significant portion of shares in National Bank of Georgia (President Carter's home province), the Riadys shifted their attention to an Arkansas bank.


C. Using a business partner's daughter:

The US media reports about the "Indonesian connection," are still unclear about the relation of the Wiriandinata couple (Arief and Soraya), who donated the amazing US$ 425,000 for the Clinton presidential campaign, and the Riadys. In other words, was it a donation from the company, hence, a donation from a "foreign national", or a donation from a US resident, made from funds generated in the US during their stay in the USA.

Personally, I believe that that political donation came straight from the Lippo Group, and is generated from Lippo's business activities in Indonesia, Hong Kong, or China. I also do not believe that the Wiriandinatas were acting on their own behalf.

Why? First of all, Soraya Wiriandinata's father, Hasyim Ning, one of the few indigenous Indonesian businesspeople who successfully survived the transition from the Sukarno to the Suharto administration, was not simply an ordinary friend or small business partner of the Riadys in the Lippo Group. Until November 1995, he was still listed at the Jakarta stock market as the "president commissioner" of Lippo Bank (Gatra , Nov 25, 1995: 77).

Secondly, in one of his interviews with the Indonesian media, Mochtar Riady had expressed his eagerness to train an unnamed child of Hasyim Ning to join the Lippo Group's management. He had assigned that task to one of his own sons. In particular, he had asked that child of Hasyim Ning, not to relinquish the agency of Cherokee jeeps, since the child's father, Hasyim Ning, who was known as a "automobile king" during the Sukarno administration, had lost most of his car agency rights to other business people (Sinar , Oct. 21, 1995: 19).

Based on this information, it is most likely, that Arief and/or Soraya were or was the child of the late Hasyim Ning, who was being prepared to join the management rank of Lippo Group. This only further strengthen the view, that their donation to the Clinton presidential campaign, was a task they had to carry out, as part of their "management training."


D. Influencing the GSP debate:

Influencing President Clinton's East Timor policy, might not be the only political agenda, which the Riadys had in mind, by maintaning a close relationship with the Clinton administration. I believe that influencing US trade policy towards Indonesia, was a more urgent and important one.

I base this belief on the fact that one of the Lippo Group companies, namely Lippo Industries, had been the casualty of US trade policy to Indonesia. In particular, the possibility that the Clinton administration might abolish the GSP (general system of preferences), which would harm Indonesia's export to the US.

The debate on whether to abolish or continue the GSP facility to Indonesia was sparked, two years ago, due to the campaign of US NGOs, who were angered by the violation of workers' rights in Indonesia and East Timor, including the manipulative recruitment of young East Timorese to work for Suharto-related businesses in Indonesia, organized by Suharto's eldest daughter, Siti Hardiyanti Rukmana, aka Tutut. Besides that special case which linked the East Timor issue with Indonesian workers rights, the repression of independent trade unions in Indonesia, especially the SBSI under the leadership of Dr Mochtar Pakpahan, and the murder of the female worker activist Marsinah in Surabaya, were the burning issues at that time.

Fearing the abolition of the GSP scheme for the loudspeaker boxes exported by a Lippo Industries subsidiary, Daiwa Industrial Indonesia (DAI), 35% of the shares of that company was sold to a Taiwanese company (Info Bisnis , May 1994: 17) . Probably, that was Lippo Industries' tactic, to avoid labelling their products as being 'made in Indonesia', due to the heated debate in the US about the violation of Indonesian and East Timorese workers rights.

In that light it is interesting to observe, that currently, in spite of the detention of the leaders of two major independent trade unions in Indonesia, namely Mochtar Pakpahan the SBSI leader and Dita Sari, the leader of a newer and more radical independent trade union, PPBI, both of whom have been threatened with the anti-subversion law (which carries the death penalty), the Clinton administration has not responded as they did two years ago. There has been no threat to abolish the GSP facility for Indonesia, and the Clinton administration has even gone ahead with selling F-16 military planes to Indonesia.

So, in conclusion one can say, that the aspirations of the East Timorese freedom fighters as well as the Indonesian pro-democracy activists, might have been overshadowed by the overlapping business interests of the Indonesian and US ruling elites. Clinton has listened more to Mochtar Riady, than to Mochtar Pakpahan, in spite of Mochtar Pakpahan's belief that the US Embassy is supporting his cause.