EAST JAVA MUDFLOW UPDATE: POLICE DROP CASE AGAINST LAPINDO;

UNCLAS SECTION 01 OF 02 SURABAYA 000074

SENSITIVE
SIPDIS

DEPT FOR EAP, EAP/MTS, INR/EAP, AND EB/ESC/IEC
DOE FOR CUTLET/PI-32 AND NAKANO/P-42
COMMERCE FOR USDOC 4430

E.O. 12958: N/A
TAGS: ECON EPET EINV SENV ELAB ENRG PGOV ASEC ID
SUBJECT: EAST JAVA MUDFLOW UPDATE: POLICE DROP CASE AGAINST LAPINDO;
SUBSIDENCE THREATENS VILLAGES AND NEW INFRASTRUCTURE

REF: SURABAYA 70 AND PREVIOUS

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1. (SBU) Summary: On August 5, the East Java Provincial
Police Chief (Kapolda) announced that his office was dropping
its investigation into the cause of the Sidoarjo mudflow. This
decision effectively absolves the Lapindo company and its staff
of responsibility for causing the mudflow, which has inundated
numerous villages and displaced thousands of residents and
businesses since it began in May 2006. Initial public reaction
has been universally negative, with many suggesting that this
"inappropriate decision" favors business over public interests.
Meanwhile, new subsidence appeared in areas designated for
relocation of critical transportation infrastructure raising
questions about the long-term viability and safety of new road
and rail routes. End summary.

A "Natural Disaster"
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2. (SBU) Three years after the mud started flowing, the
East Java Police Department has dropped its investigation into
the causes of the Sidoarjo muflow. In his instruction letter
dropping the investigation, East Java Kapolda, Inspector General
Anton Bachrul Alam, determined that the investigative team had
not been able to prove that there was correlation between
Lapindo's drilling activity and the mudflow. The letter states
that the investigators failed to prove that Lapindo's drilling
triggered the mudflow. The East Java Prosecutor's Office had
returned the police dossiers on four previous occasions for
insufficient evidence. Lapindo and 13 staff members involved in
drilling have been officially absolved of responsibility.


3. (SBU) The Head of East Java Police Public Relations
Department said the Kapolda's instruction letter to drop the
case was also based on 2009 legal verdicts from both the Jakarta
State Court and the Supreme Court, which determined that Lapindo
was not guilty of causing the mudflow. Previously, Parliament's
Special Committee of Sidoarjo Mudflow Mitigation had asked
President Yudhoyno to revise the Presidential Regulation to
reflect the courts' decisions that the mudflow is a natural
disaster and therefore no longer a corporate responsibility.
Hatta Rajasa, the State Secretary, told journalists in Jakarta
that the central government is preparing a revised Presidential
Regulation on mudflow soon.

Another Corporate Victory
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4. (SBU) The Kapolda's announcement was criticized by many
observers, who claimed that the decision demonstrated yet
another victory of corporate influence over public interests.
Dr. Suparto Wijoyo, Airlangga University, told ConGen Surabaya
that the Kapolda's decision to issue such an instruction letter
has tarnished the integrity of Indonesian law. He argued that
the Kapolda does not have authority to declare Lapindo not
guilty; only the courts could do so. Pointing to the conclusion
of 42 international geologists at the October 2008 International
Seminar of American Association of Petroleum Geologist (AAPG)
that the mudflow was a manmade disaster, he observed that the
Kapolda neglected the fact that the mudflow is a catastrophic
man-made disaster which has caused huge suffering and economic
loss. Mohammad Mirdas, MP of East Java parliament, and Muhammad
Syaiful Aris, Director of Surabaya Legal Aid Institute which
brought the original court case, told us that the Kapolda's
decision was a corporate victory against the law. During an
interview with Suara Surabaya radio station, Dr. Suparto said
that he would urge the President to review the job performance
of the East Java Kapolda. In contrast, Lapindo's Vice President
said that the company welcomes the Kapolda's instruction letter.


5. (SBU) The Presidential Regulation, which established
the Sidoarjo Mud Management Agency (BPLS),stated that Lapindo
was responsible for mitigation efforts and compensation to
victims within the "impacted area." A BPLS official told us
that the promised Presidential Regulation on BPLS would release
Lapindo from its financial obligations regarding mitigation.
Lapindo would, however, still be responsible for its

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compensation commitments. As reported reftels, financial
difficulties have already affected Lapindo's support for
mitigation efforts and delayed final compensation payments to
victims. The government has promised to compensate the growing
number of victims outside the impact area from the state budget.
With Lapindo absolved of responsibility by the courts,
legislators, and the now the police, the government must now
assign clear responsibility for funding BPLS's critical
mitigation efforts.

Subsidence Threatens Another Village, New Infrastructure

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6. (SBU) New land subsidence 3.5 kms west of the epicenter
threatens the planned relocation of critical transportation
infrastructure. As reported reftels, BPLS is concerned by
increasing subsidence levels to the north and west of the
mudflow containment areas. Most recently, two flammable geysers
erupted inside two houses in a village west of Porong and within
300 meters of planned new infrastructure. The Regent of Sidoarjo
publicly urged BPLS to conduct thorough studies on the impact of
new subsidence on relocation plans. On August 10, 200 meters
of the outermost dike at Gempolsari village northeast of the
epicenter subsided 3.5 meters, but did not completely collapse.
BPLS immediately repaired and strengthened the dike walls.
Should this dike fail, mud and water will inundate a previously
unaffected village.
MCCLELLAND