Investors should shun Indonesia's 'Big Coal' says Global Witness

By agency reporter
April 3, 2019

A new report by NGO Global Witness has revealed how Vice-Presidential candidate Sandiaga Uno had a hand in payments of at least US$43 million from a major Indonesian coal company to an obscure offshore firm, and that he may have secretly benefited from these payments in some way.

The news comes just weeks before Indonesia’s national election, raising issues of grave public concern about the former business dealings of an influential politician. 

The report reveals how a company Uno co-owned took over a major coal company, Berau Coal, which then agreed to make large payments in advisory fees to an obscure offshore company, Velodrome Worldwide Ltd.

It details how at least US$43 million of questionable payments then flowed from Berau Coal to Velodrome between 2010 and 2012.

It also reveals how Uno must have known about the payments, because they were based on an agreement made when he was in an influential position at Berau Coal, and continued when he was a board commissioner with oversight of Berau’s directors.  

Moreover, he may have had an interest in Velodrome and secretly benefited from the payments in some way.  He had previously owned Velodrome and a long-term associate who was working for him in several other offshore companies is Velodrome’s last known owner.

These were not the only questionable payments made by Berau Coal.  A number of other questionable transactions were linked to Sandiaga Uno’s business partner, Rosan Roeslani.  

Together these outflows weakened the finances of Berau Coal, contributing to it defaulting on hundreds of millions dollars in debt, with an adverse impact on other investors in the company.

Globally, coal is fast becoming high-risk and high-cost for those providing financial and political support to it. But within Indonesia it is increasingly controversial due to air pollution, water and land contamination and recent corruption scandals. 

This briefing provides a further cautionary tale for the banks and investors still considering financing Indonesian coal:  they could lose their money as well as their reputation.

Global Witness has also released a second briefing focusing on unanswered questions about a former business deal of the government minister Luhut Pandjaitan. This outlines the sale of Pandjaitan’s coal company Toba Bara Sejahtra, for an undisclosed amount, to an unknown buyer.

These two facts raise questions of public concern, at a time when Uno is a senior member of the government. They touch on the issue of politicians’ ownership of companies, which has become a live subject of debate in the election campaign.

Stuart McWilliam, Climate Campaign Leader, Global Witness said: “Uno may no longer be a businessman. But as a man running for one of the highest public offices in Indonesia, he should be gravely concerned with addressing these matters. Yet, he has not provided a credible account of his part in the payments to Velodrome, and when given the opportunity to comment, he did not do so. 

“Foreign lenders and investors have enabled the Indonesian coal industry to keep going, despite its well-known association with climate change, deadly air pollution, water and land pollution and recent corruption scandals.”

“These findings offer yet another potent reason why banks and investors should shun Indonesia’s Big Coal, and why politicians should withdraw their support for the significant expansion of coal-fired power in Indonesia.”

* Read Indonesia's Shifting Coal Money here

* Global Witness


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