MARCH 10, 1997 VOL.149 NO.10
BUSINESS
BOB HASAN'S GOLD TOUCH
HOW SUHARTO'S POINT MAN WALKED INTO AN ECONOMIC MINEFIELD
AND EMERGED ON TOP
BY RAHUL JACOB
At a press conference late last month following his takeover as chairman of carmaker Astra International, one of Indonesia's bluest of
blue-chips, Mohamad "Bob" Hasan seemed completely in his element. By turns combative and charming, he even grabbed a camera
from the crush of photographers and took a picture of the press. When reporters started to encroach upon the podium, Hasan, who
is perhaps President Suharto's closest confidant, snapped that he would leave the press conference if they didn't back off.
At that raucous occasion, Hasan defended the recent deal he brokered to settle an unseemly battle that has raged since last fall over
what could be the world's largest gold mine. Estimates of its contents have ranged from 57 million ounces, worth $20 billion, to as
much as 200 million ounces. The contestants were President Suharto's two oldest children, daughter Siti Hardiyanti Rukmana,
known as Tutut, and son Sigit Harjoyudanto. Each child partnered a Canadian mining company: tiny Bre-X Minerals for Sigit and
giant Barrick Mining for Tutut. Hasan's deal last month gives Bre-X, which discovered the reserves in early 1996, a 45% share of the
mine, but two Hasan-controlled companies will receive a combined 30% stake for which they pay nothing. A Jakarta businessman
calls it "corporate robbery," but Hasan isn't flinching: "It's a very clear deal. There's no payment or nothing." Says a financial
executive at an Indonesian conglomerate: "If Hasan wants something he gets it, but he always makes sure the First Family gets its
share."
Hasan's confidence is understandable. In the past few months, he has graduated from the ranks of the elite businessmen who are
close to the powers-that-be in countries like China, Malaysia and Indonesia to a prominence unmatched elsewhere in Asia. Hasan
runs Nusamba group, the investment vehicle of three charitable foundations headed by President Suharto. Referred to by critics as
Suharto's "retirement fund," Nusamba, which has assets estimated at $5 billion, seems to want a share of every large, long-term deal
cut in Jakarta these days. "In any good business, we will move in," Hasan said at his February press conference. In November,
Hasan beat another prominent Indonesian businessman in the race to control Astra. In December, he turned his attention to bringing
Indonesia's gold rush to an orderly close. Since the death of the President's wife Tien in April, Hasan's influence has grown: he alone
has been able to keep the peace among Suharto's six children, whose business rivalries have recently escalated. "He is playing a
good uncle, mediating in this civil war," says Christiano Wibisono, who heads a Jakarta consultancy.
Hasan's rise to riches began when he forged close ties to the army not long after Indonesia won independence from the Dutch in
1945. The young colonels who took control of the provinces were given little or no money by the government and had to start side
businesses to support their troops. In the web that quickly developed between entrepreneurs and generals, Hasan found himself at
the center in the 1950s after General Gatot Subroto, an independence war hero, adopted him as a foster son. It was an extraordinary
gesture: Hasan is ethnic Chinese and had started his working life as a driver in Central Java.
Subroto introduced Hasan to Suharto, who was then a colonel in charge of an elite unit in Jogjakarta, historic seat of the Javanese
sultanate. "I have been friends with President Suharto for more than 40 years," Hasan says matter-of-factly. Like many long
friendships, it has seen twists and turns. In the 1950s, the two were involved in a barter transaction for rice from Singapore in return
for sugar from Java; the deal went sour. Suharto was stripped of his command and transferred to Jakarta. Hasan followed his mentor
to the capital and waited for his star to rise, which it did after President Sukarno's ouster in 1965. Hasan also undertook a pilgrimage
to Mecca and converted to Islam.
Providence has smiled on him ever since. On the recommendation of friends in the military, he was given a 10% stake in the local
subsidiary of U.S.-based forestry giant Georgia-Pacific in 1972. That became the base camp for an assault on Indonesia's vast
forests. He soon acquired the remaining 90% of the company and built a timber empire called Kalimanis Plywood Industries. In the
1980s, he founded Apkindo, a state-sanctioned cartel that controls Indonesia's plywood exports. In that role, he stood up to buyers
elsewhere in Asia and cast himself as a fierce trustee of the country's resources. In an oft-repeated anecdote, Hasan boasted after
golf with Suharto and visiting actor Sylvester Stallone, "I told Rambo, 'I am king of the jungle.'"
A well-preserved 66, Hasan today holds sway over not just Indonesia's rich forests but the presidential palace as well. He wields
influence on behalf of Suharto, who appears to have grown weary of it. "He is more powerful than Liem [ethnic Chinese billionaire
Liem Sioe Liong, whose association with Suharto also spans more than four decades] and the minister of forestry or minister of
mining," says consultant Wibisono. That has never been more apparent than in the past few months. After the battle between the
Suharto siblings and their Canadian allies showed no signs of abating, Hasan gathered several of the parties at the President's cattle
ranch and forged a compromise. The deal has the Hasan stamp: the appearance of ensuring that Indonesia's national interests are
represented while cutting the First Family a slice. Nusamba, which is majority-owned by the President's charitable trusts and
10%-owned by eldest son Sigit, walked away with a 30% share of the reserves. As Jakarta sees it, Bre-X is also a winner because it
comes away with a 45% share of the mine. But that is down from the 90% stake it originally claimed, prompting angry complaints
from Canadian shareholders. Meanwhile, some investors in Astra, Indonesia's leading auto assembler and distributor, have expressed
concerns since Hasan took an 8% stake in the company in November. Analysts say that Theodore Rachmat, the well-regarded
president-director of Astra, is already playing a diminishing role in the company.
The Busang episode may dim Indonesia's new-found luster as a destination for foreign capital. The government liberalized
investment regulations in 1994 and last year attracted $5.4 billion in foreign direct investment, among the highest inflows in the
developing world. This year's total should top $6 billion. Says Tim Condon, regional economist with Morgan Stanley: "The numbers
suggest it remains a good place to invest, but if its reputation is too besmirched, it could have an impact on actual flows."
In Suharto's 32-year reign, his country of 200 million people has made extraordinary strides against poverty and illiteracy, though the
admiration he has earned does not always rub off on his family. Says an Indonesian financial executive: "Purely out of self-interest,
they should be giving more, not grabbing like the Marcoses did" in the Philippines. Trouble is, there is no one but Hasan to give the
President that advice. Photos of Suharto from the years after he brought Indonesia back from the chaos of the 1960s show that he
was attentive to his cabinet ministers in meetings. Now, he talks and they listen--and apparently always agree. Today, says a former
minister, Suharto has lost interest in governing and only wants to secure his children's future. As steward of Suharto's legacy, Hasan
faces his toughest job.
--Reported by Michael Shari/Jakarta |
