Settlement Time

The government has elected to adopt a path of mediation for settlement of the Newmont case. A timely decision before the president visits the US?

ON May 13, the Department of Finance held a closed-door meeting, not to discuss the state of the economy, but rather to discuss the ramifications of adopting a path of mediation to settle the government's lawsuit against PT Newmont Minahasa Raya on environmental destruction charges. The request for mediation was made by the South Jakarta District Court for a civil law case involving alleged environmental destruction in Buyat in North Sulawesi by Newmont.

The case also carries criminal elements. "The indictment is still in the process of being completed," said Robert Ilat, chief of Prosecution of Special Crimes at the North Sulawesi High Prosecutor's Office. However, the meeting was primarily concerned with the civil lawsuit. On March 9, the government filed a civil suit against Newmont, demanding US$117.68 million in damages and an additional Rp150 billion in non-material damages for violating Law No. 23/1997.

During the meeting, the State Minister for the Environment, Rahmat Witoelar, stated that it was of crucial importance that Newmont admit its guilt and that the victims of the environmental damage receive compensation for their loss. After the meeting, Witoelar said that an agreement on the official government stance on the case had been reached. "The government has decided to settle the case outside the court system," said Coordinating Minister for the Economy, Aburizal Bakrie.

In addition to Aburizal Bakrie, who chaired the meeting, the Coordinating Minister for People's Welfare, Alwi Shihab; the Minister for Energy & Natural Resources, Purnomo Yusgiantoro; and Nur Hassan Nirajuda, the Foreign Affairs Minister, were all present at the meeting. Also attending were representatives from the National Police, the Attorney General's Office (AGO), the North Sulawesi Regional Government, and the Department of Health.

A decision was also made to appoint the AGO to represent the government in arguing the merits of the civil case during arbitration. According to Bakrie, the AGO will receive materials and directions from a special team led by Bakrie himself, comprising staff from the Ministry of Public Welfare, the Ministry of Energy, the Ministry of Political & Security Affairs, the Department of Health, the National Police, and the North Sulawesi Regional Government.

Newmont has welcomed the government's decision to settle the case outside of court. Newmont's attorney, Luhut Pangaribuan, claims that the contract between the Colorado-based company and the Indonesian government stipulated that any disputes would be settled through mediation. "Arbitration means settlement out of court. So, actually there is no choice. That was the agreement," he said.

Settling the case outside the courts has both pros and cons. According to Raja Siregar, a researcher at the Indonesian environmental organization, Walhi, settling the case through mediation saves time and energy. Siregar also noted that mediation would ensure that the government could secure compensation for the victims of the destruction. "In this sense, mediation is a win-win solution," he said.

However, Siregar also outlined some disadvantages of arbitration. Siregar voiced concerns that if the mediation efforts were not successful, people might believe that Newmont was not guilty of committing environmental damage. Siregar also noted that adopting a path of mediation prevents the government from testing the law enforcement process for environmental protection cases. "This is the first time that the government has filed an environmental lawsuit against a company," he added. Nevertheless, Minister Witoelar vowed that trial would continue if the mediation process fails.

Soedarto, the Chairman of South Jakarta District Court, predicted that the arbitration process would end by the end of May. The arbitration process is being adjudicated by Justice Wayan Rena. And Santoso, AGO Director of Civil Rights Protection, confirmed that the arbitration process had already begun and would continue until May 31.

However, some observers have expressed concerns that the government's decision to adopt a path of mediation was politically motivated. According to Raja Siregar, these concerns surfaced following US Ambassador to Indonesia, Ralph L. Boyce's, decision to visit Newmont directors held in police custody on charges of having violated Law No. 23/1997 on Environmental Management at National Police Headquarters. Boyce also met with former president Megawati on September 27, 2004 and National Police Chief, Da'i Bachtiar, just two days after that.

The five Newmont directors arrested and held in custody were William Long (an American citizen), Phil Turner (an Australian citizen), and David Sompie, Putra Wajayatri, Jerry Kojansow (Indonesian citizens). Newmont's president director, Richard Ness, was not arrested.

Siregar also claims that the government's decision to adopt a path of mediation has also been linked to President Yudhoyono's planned visit to America. Yudhoyono is scheduled to visit Washington from May 24-26 to seek international support for the government's working programs in the fields of investment, trade, education and the economy.

Nevertheless, Minister Witoelar has denied that the government's decision to settle out of court was influenced by Yudhoyono's plans to visit America. In fact, Witoelar claims that Yudhoyono gave special orders to "do what is right" in the Buyat case. The minister also said that if asked about the case, the president could candidly reply that Newmont has been charged with damaging the environment. The minister echoed the president's sentiments. "If we are in the right, then what have we to fear?"

Abdul Manan, Sukma N.L., Raju F., Agriceli

TEMPO, MAY 30, 2005-038/P. 26 Heading Law