EAST JAVA MUDFLOW UPDATE: GOVERNMENT TAKES OVER MITIGATION,

UNCLAS SURABAYA 000113 SIPDIS E.O. 12958: N/A TAGS: ECON EPET EINV SENV ENRG SOSI PGOV ID SUBJECT: EAST JAVA MUDFLOW UPDATE: GOVERNMENT TAKES OVER MITIGATION, VICTIM COMPENSATION PROCEEDS AT A DELAYED PACE REF: A. A. SURABAYA 66 AND PREVIOUS (GOVERNMENT PLANS TO TAKE RESPONSIBILITY FOR MITIGATION) ¶B. B. JAKARTA 1699 AND PREVIOUS (KEY PARTY PICKS NEW LEADER) ¶1. SBU(U) SUMMARY: The Indonesian government has taken over full responsibility for mitigation efforts at the Sidoarjo mudflow disaster. Due to financial difficulties, Lapindo has not met the original compensation deadline. However, most victims have accepted an installment payment system that Lapindo is optimistic it will be able to meet. Bakrie frames Lapindo's compensation payments as "charity" to avoid the implication of guilt. ¶2. (U) In the aftermath of the Sidoarjo mudflow disaster in 2006, the President of Indonesia tasked Lapindo Brantas with the responsibility of funding mitigation efforts and compensating victims for their lost property. In July of 2009, the Indonesian Parliament required that the government completely take over mitigation responsibility (reftel A). The government agency responsible for dealing with the mudflow disaster, BPLS, confirmed that it assumed full responsibility for all mitigation efforts in September. ¶3. (U) Lapindo's only remaining financial obligation is to compensate victims for their lost property. The original deadline for compensation was 2008. However, Lapindo claims that a combination of financial difficulties brought on by the international financial crisis and imprecise land ownership documents prevented them from meeting this deadline. In order to cope with the financial difficulties Lapindo has resorted to an installment system, paying victims approximately $1,500 per month. Bambang Mahargyanto, president of the subsidiary company Lapindo established to adminster compensation payments, says that Lapindo will complete compensation payments for over 60% of the victims in December of 2009 and will finish all compensation payments by 2012. ¶4. (U) Even one of the harshest critics of the compensation process is on board. Suranto claims to be the spokesman for a group of 563 families who have experienced delays in receiving their compensation payments. While he has consistently criticized Lapindo and owner Abdurizal Bakrie due to delays in the compensation process, he said the families he represents now accept the installment process. However, Suranto remained skeptical of claims that Lapindo doesn't have enough money to pay the required amounts at once. He pointed out that Bakrie recently spent "huge" amounts of money to become the new chairman of Golkar (reftel B). He asked, "If he can spend that much money on Golkar, why can't he spend money on us?" ¶5. (SBU) Bakrie continues to insist that the mudflow was a natural disaster. He points to a series of judicial decisions that have absolved his guilt (reftel A). He insists that his efforts to help the victims of the mudflow disaster are charity, and that his decision to help stems from his mother's request that he aid the disaster victims. Following Bakrie's lead, Bambang said that Lapindo does not refer to their activities as "compensation" since this implies guilt. Rather, the company uses terms such as "corporate social responsibility," "financial assistance," or even "donation." Khoirul Huda, a spokesman for 3150 families of mudflow victims, agreed with this assessment, and insisted that all of the mudflow victims are grateful for Bakrie's assistance even though the disaster "was not his fault." Regardless of the motivation behind the compensation, or the word used to describe it, Bakrie stated in September 2009 that his family had already spent around $620 million on "charitable activities" for mudflow victims and plans to spend another $240 million. MCCLELLAND