Charles R. Smith
Saturday, Jan. 27, 2001

In 1994, Edison Mission Energy landed a trade trip with Ron Brown to Indonesia. As a result of that trip, Edison also ended up with a contract to build the Paiton I coal-fired power plant. Paiton I was billed as the first "private" electric plant in Indonesia. In 1994, "private" ownership in Indonesia equated into owned and operated by the Suharto "first family."

The partners in the Paiton I consortium include Edison Mission Energy, Mitsui & Co. Ltd. of Japan, General Electric Capital Corp. and P.T. Batu Hitam Perkasa. Just by coincidence, of course, P.T. Batu was owned by Indonesian dictator Suharto's youngest daughter, Titek Prabowo, and her brother-in-law, Hashim Djojohadikusumo.

According to the Commerce Department, 0.75 percent of the Paiton project was reserved for Suharto's daughter Prabowo, or an instant $15 million in cash. Her kickback, along with a cut for "brother-in-law" Hashim and other Suharto relatives, was to be provided up front, in cash, in the form of a $50 million loan. The $50 million loan was to be paid back by the profits or dividends from the power plant.

The U.S. Commerce Department was not the only agency to take notice of Edison's special contract with Suharto's daughter. In 1994, agents from the Central Intelligence Agency met with Chinagate figure John Huang on the Paiton Power Plant. The 1994 meeting between the intelligence agency and Huang included detailed information about the $2.6 billion Paiton electric power plant for Indonesia.

According to the documents, CIA agents Bob Beamer, Chris Crosby, Lia Fidas and Nancy Goldcamp attended an August 1994 TPCC, or Trade Policy Coordinating Committee, meeting with John Huang. The subject of the CIA meeting was U.S. government-financed trade deals that contained "first family involvement" or illegal payments made to relatives of then Indonesian dictator Suharto.

A 1994 Commerce Department report found in Huang's files noted that the Indonesian Paiton power plant had encountered difficulties with financing because the Asian Development Bank (ADB) knew it contained money for a Suharto family member.

"ADB had raised concern about first family involvement during its consideration of the $50 million financial portion," states the Paiton Project document found in Huang's files.

"Ambassador Barry stated that the project is facing two problems (i) the ADB financing may cave in and (ii) EXIM financing. Regarding ADB, technical questions have been satisfied, but ADB is skiddish about involvement of Indonesia's first family (a minority shareholder is married to Pres. Suharto's daughter)."

In addition, 1994 documents provided by the Overseas Private Investment Corporation (OPIC) noted that Suharto's daughter Prabowo and her brother-in-law, Hashim Djojohadikusumo, were given a total 2.5 percent ownership in the U.S.-sponsored power project, through their local company BHP.

"ADB is still considering this, b/c of very minimal involvement of Indo ruling family in the Mission project... ADB's delay revolves around concern for projects in Indonesia involving the first family. .75% ownership of the Mission project by daughter of Indo pres."

Directly after meeting with the CIA on the known Suharto "first family" involvement inside the Edison Paiton power project, Huang proceeded to place a three-hour call to his former employer, the Lippo Group. In 1999, Huang pled guilty to federal charges of making illegal political contributions to the Clinton-Gore campaign. Huang took the Fifth Amendment more than 2,000 times when asked by Judicial Watch if he had ties to Chinese intelligence.

The documents show that Edison officials were aware of the $50 million destined for Suharto's daughter. Newly released documents also show that Edison Chairman John Bryson actually pressed Secretary Ron Brown to support the $50 no-payback loan.

Federal Election Commission records show that Mission Energy CEO John Bryson donated money to the Clinton-Gore campaign and contributed money to President Clinton's legal defense fund. In 1994, Bryson also wrote a personal letter to Brown, pressing for quick approval of the $50 million U.S. government-backed loan.

"Dear Ron," wrote Bryson, then chairman of Southern California Edison. "I am writing to request your support of the application of the Paiton Private Power Project in Indonesia for funding by the Asian Development Bank (ADB)."

"We have applied to the ADB for $50 million of funding as part of a $1.9 billion financing package. The bulk of the funds will come from a group of commercial banks, the U.S. Export Import Bank and Japan Ex-Im," noted Edison CEO Bryson.

"I would greatly appreciate it if you would indicate your support for ADB funding of this project. With that in mind, enclosed is a draft letter to Ambassador Linda Tsao Yang, U.S. Executive. Director of ADB, for your consideration."

In the end, the Asian Development Bank turned down Edison's $50 million loan deal, forcing the company to obtain the loan financing from commercial banks. Curiously, many secrets still surround the Edison coal-fired power plant in east Java. The U.S. State Department maintains that some information on Paiton must remain classified.

"The information in the one document withheld in full and in the deleted portions of the sixteen other documents withheld in part is properly classified in accordance with Executive Order 12958 (National Security Information) despite the passage of time. It's release reasonably could be expected to cause damage to the national security of the United States," wrote Ambassador Francis McNamara in November 2000.

One partly blacked-out cable from the State Department is titled "on power projects, corruption, draft laws." The December 1998 cable, a discussion between U.S. Ambassador Roy and an individual whose name was withheld, states that the individual "stressed that solutions to the problem must be simple to convince 'the people' that corruption, collusion and nepotism ('KKN') are being dealt with properly."

During the 1990s, U.S. government officials were keenly aware of the rampant corruption inside Indonesia's electric power producers. In October 1998, U.S. Ambassador J. Stapleton Roy wrote in a diplomatic cable that he had recently met with Indonesian Director General of Electricity Endro Utomo Notodisoerjo. Endro, according to the cable, was more than honest about criminal activity.

"Commenting on corruption, collusion and nepotism (KKN), Endro said that in the past there was no separation between 'power' (not electric but former first family power) and business. 'All the IPP's have a relation with power, and it is still going on,' added Endro."

However, the real key to the Paiton power project is the ultra-clean coal - then mined from only two places on earth, Indonesia and Utah. Toward that end, brother-in-law Hashim received an exclusive, no-bid, no-cut contract to supply the clean coal to the Paiton power plant. Hashim's financial backer in his Indonesian coal mining business is Moctar Riady and the Lippo Group.

In 1996 Clinton issued an executive order creating the 1.7 million-acre Grand Staircase-Escalante National Monument in Utah - making the only other known "low sulfur" deposit off limits for commercial mining. Thus, Lippo obtained control of the world's only low-sulfur coal mine.

Edison is also partner of Indonesia's Lippo group; a consortium part-owned by Indonesian billionaire Moctar Riady and a front company for Chinese military intelligence, CRE or China Resource Enterprises. The son of Lippo founder Moctar Riady, James Riady, recently pled guilty for passing illegal donations to the Clinton-Gore political campaigns.

In 1999, PLN acquired documents that stated Clinton administration officials were aware of "corruption, collusion and nepotism" inside the electric power trade deals made with Indonesia. PLN used the documents to win a lawsuit against the Clinton administration, charging that U.S. officials knew the Paiton power plant contract was "corrupt from the beginning."

In December 1999, an Indonesian court ruled that the entire $2.6 billion Edison Paiton power plant contract was illegal. The Indonesian Courts ruled, based on the documented evidence presented here, that the multi-billion-dollar electric deal with Edison was corrupt from the beginning. The state Indonesian Power Company PLN estimated that it had lost over $18 billion in total from Suharto corruption inside U.S. government-sponsored power plant contracts.

If Californians are going to be stockholders in Edison International, perhaps they should know why the company is short several hundred million dollars. An Indonesian government audit recently revealed that the Edison Paiton power plant had accumulated unexplained losses of over $280 million.

Read more on this subject in related Hot Topics:
Clinton Scandals
Executive Orders
Ron Brown Reports

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