US mine operator gave millions to Indonesian military, police: Report

A US mining company extracting gold from the largest reserve in the world in Indonesia's remote Papua province has paid millions of dollars to military and police here, AFP reported Wednesday quoting the New York Times newspaper.

A New York Times report on Freeport-McMoRan's Grasberg mine operations said company records showed that from 1998 to 2004, the firm gave nearly 20 million dollars to high-ranking Indonesian military and police, and to military units.

"Individual commanders received tens of thousands of dollars, in one case up to 150,000 dollars, according to the documents," the newspaper said.

The biggest beneficiary was the commander of the troops in the mine's area, Lieutenant Colonel Togap Gultom, according to the report, which also named other senior Indonesian police.

Payments to individuals are illegal under Indonesian law, a former Indonesian attorney-general told the newspaper.

The revelations come amid a corruption crackdown ordered by Indonesian President Susilo Bambang Yudhoyono, who took power in October 2004 pledging to clean up a country consistently rated as one of the world's most graft-prone.

The New Orleans-based company defended itself to the newspaper, saying that it had provided a secure working environment for its more than 18,000 employees and contract workers in accordance with US and Indonesian laws.

"There is no alternative to our reliance on the Indonesian military and police in this regard," the company wrote.

"The need for this security, the support provided for such security, and the procedures governing such support, as well as decisions regarding our relationships with the Indonesian government and its security institutions, are ordinary business activities."

Freeport-McMoRan has been one of the top sources of revenue for Indonesia's government, providing it with 33 billion dollars in benefits from 1992 to 2004, almost two percent of the country's gross domestic product, the Times reported.

This year it expects to pay the government one billion dollars.

After riots that the military appeared to be involved with disrupted production in 1996, the company also spent 35 million dollars on military infrastructure, the report claimed.

The company has proved invulnerable to challenges from local people, environmental groups and the ministry of environment, the report said, citing a ministry scientist who complained that getting it to comply with requests to reduce environmental damage was like "painting on clouds".

Six billion tons of rock and waste are expected to be generated from the mine, twice as much earth as was excavated for the Panama Canal.

Much has already been dumped in the mountains around the mine or down a system of rivers that run into low-lying wetlands close to a national park granted special status by the United Nations, the Times said.

One study has shown that the rivers and surrounding wetlands were now "unsuitable for aquatic life".

The newspaper also alleged that the company had intercepted e-mail messages to spy on its environmental opponents. (*)