Philippine Daily Inquirer, December 6-7, 1998

INTERVIEW 'Pinoys easy targets of Suharto cronyism' By Walden Bello (Following is an interview by University of the Philippines Prof. Walden Bello of Dr. George Aditjondro, 52, reputed to be one of the top experts on the wealth of former Indonesian President Suharto, having spent most of the last few years tracing Suharto and his cronies' financial trails all over the world. The interview was conducted in Sydney, Australia, on Nov. 28.-Ed.) Q: HOW would you characterize First Pacific? A. First Pacific is the offshore company of Liem Sioe Liong, Suharto's main business operator. It was set up in Hong Kong over 15 years ago when a young Filipino banker named Manuel Pangilinan was invited to become its managing director. This was probably a long-term strategy that anticipated Liem's loss of power in Indonesia by building up a multinational company in Hong Kong. Q. Why base it in Hong Kong? A. Because it was meant both to tap into the economic opening in China under Deng Xiaoping and to link it to the capitalist world. By being based in Hong Kong, Liem was getting the best of both worlds-the state-directed market socialist system of China and the world economy dominated by both the United States and Japan. Q. But why hire a Filipino? A. I don't think that it was a coincidence that a Filipino was hired. Liem wanted to tap into the most Americanized Southeast Asian country, which was also a budding market, as well as internationalize the Suharto-linked businesses. Pangilinan, as a Filipino with solid Western business ties and Western training, was ideal. But Pangilinan wasn't alone. He brought with him three deputies-Robert Meyer, Ricardo Pascua and Vicente Tinsay III, two of whom were Filipinos. Q. Does Liem or his family control First Pacific? A. Yes. The biggest shareholder-the controlling interest-in First Pacific is Liem Investors Inc. Suharto's interests are represented by Sudwikatmono, his half-brother.  Q. How much leeway does Pangilinan have in decision-making? A. He's a professional manager. So far my research has not been able to verify if and how many shares he has at First Pacific. But I wouldn't be surprised if he has shares in the corporation since that is a standard practice in big business: You keep somebody by giving him shares in the company. My sense is that Anthony Salim, Liem's son, trusts Pangilinan completely to develop the conglomerate. However, the Liem family does come in at strategic points to make sure that deals are pulled off. For instance, during the negotiations on the sale of Fort Bonifacio, Liem stepped in directly by getting the top taipans in Southeast Asia to form Metro Pacific. By getting financing from top Chinese families in Thailand, Indonesia and the Philippines-with a very significant chunk of financing from Bangkok Bank, owned by the Sophonpanich family in Bangkok-Liem was able to outmaneuver the local Filipino-Chinese bloc opposed to him. Pangilinan could not have pulled that off by himself. Q. Does Pangilinan have their personal approval for deals, like the PLDT deal? A. Pangilinan has a carte blanche. The Liem-Suharto family has complete trust in Manny and his group so long as they can deliver, and so far they have. They are even more important now than before. With the economic crisis in Indonesia and the slowdown in China, First Pacific is expanding in the United States and Europe. They're translating their assets in Indonesia into cash and investing it outside the country. It's not a top down thing where Manny has to seek permission from Liem or Anthony for any major investment decision. Manny has the full authority of the Liem and Suharto families because he can deliver. And, if my suspicions are right, one of the reasons he performs so well is because he probably has stocks in First Pacific.  Q. What do you think of First Pacific's PLDT acquisition? A. It's an irony that Filipinos got rid of Marcos and his crony capitalism, only to become easy targets of Suharto-style crony capitalism. And there is a double irony in that this offensive is spearheaded by a team of Filipino business people under Manny Pangilinan. You've got to realize that Manny Pangilinan is to Liem and Suharto what, say, Herminio Disini was to Marcos . . . but on a much bigger scale. Q. You keep referring to Suharto interests. Why? A. Because First Pacific is linked not only to Liem but to Suharto directly via shareholder Sudwikatmono, Suharto's foster brother. You have to see First Pacific as the advance troops of the Suharto family in the Philippines and Asia, just as the Salim group formed the advance troops of Suharto in Indonesia. It was First Pacific that created the climate and context for the Suharto children to operate in the Philippines.  Q. What do you mean? A. You Filipinos can't afford to be naive. PLDT is only the tip of the iceberg, because you also have the Metro Skyway Project, for which the Filipino people will be liable in toll fees for the next 25 years if they allow the contract with "Tutut" (Suharto's daughter, Siti Hardiyanti Rukman) to go on. And even before the PLDT deal, there was Mabuhay Satellite, where PLDT was a co-shareholder with "Bambang's" (Suharto's second eldest son Trihatmojo) Pasifik Satelit Nusantara in Mabuhay Satellite. And incidentally, Bambang is also the main investor in a major water supply project in Cebu City. These and other activities have been facilitated directly or indirectly by First Pacific. PLDT is merely the latest acquisition, buyout, or buy-in of Philippine icons by the Suharto-Liem group, and the list, by the way, includes the famous Tanduay liquor company. But you've got to look at First Pacific's moves into the Philippines in a broader context-its business operations were facilitated by the close friendship between (the late dictator Ferdinand) Marcos and Suharto, which continued under (President Fidel V.) Ramos.  Q: Do you think that First Pacific has links with the Estrada government? A. I heard from reliable sources that Manny Pangilinan was one of the first visitors to President-elect Joseph Estrada. I think this was part of the strategy by the Salim and Suharto group to maintain cozy relations with whoever occupies Malacaqang Palace. You see, the Suharto family is careful to cultivate ties with powerful people all over the world. In the United States, they used the Lippo Group of Riady to influence (US President Bill) Clinton. In the Philippines, Pangilinan is the broker of choice between Indonesian, Chinese and Philippine economic and political interests. It wouldn't surprise me if Suharto money was funnelled via First Pacific or  Metro Pacific into this year's presidential campaign. Q. What about with the Chinese leadership? A. Well, like other Southeast Asian Chinese conglomerates, the Salim group responded favorably to Deng Xiaoping's call to "reconstruct China."  Q. Why would Salim and Suharto want to acquire PLDT? A. This is really part of a major move of Suharto interests into telecommunications in Southeast Asia. Even before the First Pacifictakeover, PLDT was already a co-shareholder with Bambang's group in Mabuhay, the so-called Philippine Telecom Satellite, and in another telecommunications firm, PSPT-ACES. Both PLDT and Bambang were also co-shareholders in another key firm, Jasmine Satellite Communications, together with the Thai businessman-politician Thaksin Shinawatra. It is interesting that even as it has lost power in Indonesia, the Suharto group has become some sort of "Big Brother" to Southeast Asia owing to its ability to strategically diversify its resources into investments in regional telecommunications. Q. These developments are worrisome, aren't they? A. The PLDT deal should be a wake-up call to Filipinos, who think that Mabuhay Satellite is Filipino, that Fort Bonifacio is Filipino, that the Cebu Municipal Waterworks project is Filipino, that Tanduay is a Filipino beverage. Even your RFM food company is partly owned by the Indo Food Group of Salim. Where are all the Filipinos fighting Marcos-style cronyism? Have they all fallen asleep after Marcos' fall and allowed Suharto's people to take over quietly?  Q. So the PLDT acquisition is part of a bigger strategy?  A. Of course. Because Salim and the Suhartos have such extensive interests throughout Southeast Asia and China, control of telecommunications will enable them to promote their products. It will give them unparalleled ability to influence what people think, print, talk about. If you want to expand economically, you have to control the media, and control of the electronic media is achieved via control of telecommunications. What they did in Indonesia, they now are trying to reproduce on a bigger scale in Asia. Q. But what about the quality of products and delivery? What's the record of the Salim-Suharto group? A. In Indonesia, the Salim-Suharto group is known for killing competition through their control of state corporations and contracts. They raise prices once they've killed the competition. This is how Tutut has made money from her control over toll roads, Bambang in telecommunications, and Tommy (Hutomo Mandala Putra, another Suharto son) in automobiles. Quality of services. Very bad. Tutut is responsible for many deaths in her poorly constructed tollways and Tony used to own a domestic airline Sampati that operated flying coffins. Q. Will the Indonesian government move to claim assets invested by Suharto and Salim in the Philippines? A. Not only in the Philippines. Should Megawati (President Sukarno's political heir) come to power, she will certainly issue an appeal to all host countries where the Suhartos and Salims have invested their ill-gotten wealth to return them to the Indonesian people. We will simply be following the footsteps of Corazon Aquino and establish a presidential commission to reclaim these investments. I will be happy and honored to serve in such a commission. And PLDT will certainly be one of our priorities. Dr. George Aditjondro is currently a lecturer at University of Newcastle in Newcastle, Australia, where he has lived in exile for over three years.  He is formerly a professor at Satya Wacana Christian University at Salatiga, Indonesia, heading up graduate studies in development studies. He fled Indonesia in 1995 after being interrogated by the military and threatened with a military-backed. Opposition circles in Jakarta talk about him as being one of the most likely candidates to staff a future presidential or parliamentary commission to recover Suharto's wealth abroad. Author of the ecently published book, "Dari Soeharto ke Habibie: Keduapuncak Korupsi, Kolusi, dan Nepotissme Relim e Baru (From Suharto to Habibie: Corruption, Collusion and Nepotism in the New Order)." He obtained his Ph.D. in sociology and Southeast Asian studies from Cornell University.-Ed.~~~~~~~~~~