STALKING SUHARTO

Fronts The money trail winds through charity foundations

Investors Multinationals in Indonesia ponder their future

HE LOOKED PALE AND tired. Four months after resigning as Indonesia's president, Suharto, the strongman who rarely had to defend himself in his 32 years in power, did just that on Sept. 6. "I don't have one cent of savings abroad, I don't have accounts at foreign banks, I don't have deposits abroad, I don't even have any shares in foreign firms, much less hundreds of billions of dollars," the former general, 77, rambled in a 30-minute television address on a small network owned by his daughter Tutut. "If there is anyone who has proof that I have my wealth in foreign banks, I permit you to contact the embassy in the respective country and have the money transferred back to Indonesia."

Tell that to Indonesia's suffering millions. "Suharto Lies," screamed the Berita Buana newspaper the next day. Many citizens were scathing. "Maybe he doesn't have one cent," said Idiah, a young social activist in hilly Bogor south of Jakarta. "But he could have dollars or deutschemarks or pounds." As the attacks mounted, presidential son Bambang Trihatmodjo issued a challenge. "If there is anyone who knows or detects the existence of foreign accounts, father is ready to sign anything," he told the Republika daily. Switzerland's ambassador to Indonesia, Gerard Fonjallaz, said his country would cooperate with any probe if asked.

The unthinkable is starting to happen. Indonesia is investigating a business empire that was once estimated to be worth up to $30 billion. Mines and Energy Minister Kuntoro has canceled two lucrative oil-export contracts awarded to Suharto's children. The police have questioned the former president's cousin, Sudwitkatmono, Suharto's golfing buddy Bob Hasan and bankers close to the Suharto family about alleged misuse of government funds. Attorney-general Andi Ghalib is investigating supposed abuses in five Suharto-controlled charitable foundations (see story). On Sept. 15, Arnold Baramuli, the head of Habibie's Supreme Advisory Council, said a special team will question the former president within the week.

But there is widespread skepticism. "The attorney-general is not independent or serious about pursuing Suharto cases," charges Teten Masduki of Indonesia Corruption Watch. A no-holds-barred investigation can implicate nearly everyone in the present government, including President B.J. Habibie, previously Suharto's vice president and long-serving technology minister. That is why non-government organizations are conducting their own probes. Politicians are also weighing in. When Parliament convenes in November, some MPs will propose the formation of an independent investigative body. Former finance minister Mar'ie Muhammad wants the legislature to name a vice president who will take charge of the fight against KKN - korupsi (corruption), kolusi (collusion), nepotisme (nepotism).

No one knows where all this will lead. "There could be 100,000 cases," says Masduki. They can tie up the courts and disrupt many businesses for years, including ventures with foreign investors. Just tracing the money trail is already an imposing challenge. The Suharto clan's empire is incredibly complex, weaving on- and offshore crossholdings through a network of nominee companies, frontmen, foreign partners and especially 80 or so charity foundations. And after all this, the prize may be much smaller than most people expect, given the collapse of the economy. Muses a British stockbroker in Jakarta: "The Suhartos might even be broke."

That is probably an exaggeration. After all, the scramble for riches has been going on for decades. Cash and other assets could have been squirreled away in safe havens abroad, much as the Marcoses of the Philippines have done. No. 1 crony Liem Sioe Liong of the Salim Group, for example, controls large companies in Hong Kong and Singapore. The talk in Jakarta is that some of his Indonesian assets, along with those of other Suharto associates (but not the children's), may be handed to indigenous Indonesians. The pribumis, as they are called, have long complained about the economic dominance of the minority Chinese.

There is logic in targeting Liem, who is an ethnic Chinese. A beneficiary of military supply deals from Suharto in the early years, he became the virtually exclusive wheat-flour distributor of the country's state grains and sugar monopoly. That helped Liem build up Indofood Sukses Makmur, Indonesia's leading noodle maker, into a giant food company. He also tapped cheap credit from state banks to nurture an empire that now includes Indocement and Bank of Central Asia, which was recently taken over by the government after it was hit by bank runs. Suharto was also instrumental in making the fortunes of Bob Hasan, once known as Indonesia's timber king, and forestry magnate Prajogo Pangestu.