VZCZCXRO9734
OO RUEHCHI RUEHCN RUEHDT RUEHHM
DE RUEHJA #0640/01 0920541
ZNY CCCCC ZZH
O 010541Z APR 08
FM AMEMBASSY JAKARTA
TO RUEHC/SECSTATE WASHDC IMMEDIATE 8509
INFO RUEHZS/ASSOCIATION OF SOUTHEAST ASIAN NATIONS PRIORITY
RUEHBY/AMEMBASSY CANBERRA 2238
RUEHLM/AMEMBASSY COLOMBO 0965
RUEHKA/AMEMBASSY DHAKA 0895
RUEHNE/AMEMBASSY NEW DELHI 1696
RUEHKO/AMEMBASSY TOKYO 1730
RUEHWL/AMEMBASSY WELLINGTON 2470
RUEHHK/AMCONSUL HONG KONG 2533
RUEHBAD/AMCONSUL PERTH 0666
RUEATRS/DEPT OF TREASURY WASHDC
RHEHNSC/NSC WASHDC
RUEAWJA/DEPT OF JUSTICE WASHDC
RUEAIIA/CIA WASHDC
RUEKJCS/SECDEF WASHDC
RHHJJPI/USPACOM HONOLULU HI

C O N F I D E N T I A L SECTION 01 OF 02 JAKARTA 000640 
 
SIPDIS 
 
SIPDIS 
 
DEPT FOR EAP, EAP/MTS, EAP/MLS, EEB/IFD/OMA, INL 
DEPT FOR INL - C. BOULDIN 
DOJ/OPDAT FOR LEHMANN/ALEXANDRE/BERMAN 
TREASURY FOR IA-BAUKOL 
DEPT PASS TO EXIM BANK 
DEPT PASS TO FEDERAL RESERVE BANK SAN FRANCISCO FOR FINEMAN 
DEPT PASS TO USTR FOR DKATZ, BRAE 
NSC FOR E.PHU 
 
E.O. 12958: DECL: 04/01/2018 
TAGS: PGOV KJUS KCOR KMCA ID
SUBJECT: SUHARTO-LINKED FOUNDATION FOUND LIABLE FOR $110 
MILLION 
 
REF: A. JAKARTA 433 
     ¶B. 07 JAKARTA 2974 
 
Classified By: Pol/C Joseph Legend Novak, reasons 1.4(b+d). 
 
¶1.  (C) SUMMARY:  An Indonesian court ruled on March 27 that 
the Suharto family-linked Supersemar Foundation had diverted 
state funds.  The court ordered the Foundation to pay $110 
million.  The court ruled, however, that the Suharto family 
was not liable.  It is positive that the Indonesian legal 
system is trying to get at some of the Suharto network's 
ill-gotten wealth.  That said, years of legal maneuvering 
probably lie ahead before even a rupiah is collected.  END 
SUMMARY. 
 
¶2.  (SBU) BACKGROUND:  The Supersemar Foundation was 
established at the order of the Suharto government in 1975 in 
order to provide scholarships to poor students, athletes and 
foster children.  In 1976, the GOI mandated that all 
state-owned banks give five percent of their profits to the 
fund.  The Foundation also received other financial support, 
particularly from "private" donations (made basically thanks 
to arm-twisting by the Suhartos and their cronies, especially 
of wealthy Chinese Indonesians).  After dropping an earlier 
criminal suit against Suharto regarding the Foundation and 
how its funds were used, prosecutors launched the current 
civil suit in 2007. 
 
¶3.  (SBU) The suit alleged that the illegal diversion of 
funds donated by GOI institutions resulted in the loss to the 
state of approximately $440 million.  The case has drawn 
widespread attention due the involvement of the Suharto 
family in the matter.  The Court earlier ruled that the legal 
case had not ceased when former president Suharto died in 
early 2008.  The case is one of several that the GOI is 
pursuing in its attempt to recover some of the billions of 
dollars that were stolen from public coffers during the 
Suharto regime (see ref A). 
 
¶4.  (U) THE RULING:  The South Jakarta District Court ruled 
on March 27 that the Supersemar Foundation had illegally 
diverted millions of dollars in fund proceeds to private 
companies with links to the Suharto family.  The Court agreed 
with the prosecution's claim that the diverted funds totaled 
some USD $440 million, but held that the source of those 
funds remained unclear.  Since the prosecution was unable to 
provide definitive proof of exactly how much of the money 
came from government--as opposed to private--sources, the 
court decided the foundation should re-pay a flat 25 percent 
of the total, or approximately $110 million, back to the 
State.  The Court also noted that it did not want to harm the 
Foundation by assessing the full amount demanded by 
prosecutors because the Foundation continued to do some 
charitable work. 
 
¶5.  (U) The court also ruled that the Suharto family was not 
personally responsible for the diversion of funds.  Due to 
this ruling, they were not assessed to pay anything. 
 
¶6.  (SBU) APPEALS TO COME:  Lawyers for the foundation said 
they would appeal the decision.  This means likely 
consideration by both the Appeals and the Supreme Courts 
before a final decision is reached, a process which could 
take years.  Defense lawyers claim the arbitrary 25-percent 
compensation formula is proof of the government's inability 
to document its case.  They also claim that the money given 
to Supersemar by private donations made up a larger portion 
 
JAKARTA 00000640  002 OF 002 
 
 
of the funds, whereas the government can only seek the return 
of public funding. 
 
¶7.  (U) The prosecution has also announced that it may appeal 
on two bases:  First, because the Suharto family was not held 
liable; and, second, because the requested amount of damages 
put forward by the prosecution had been slashed to a fourth 
of the total. 
 
¶8.  (C) A SOLOMONIC RULING:  It is positive that via this 
ruling the Indonesian legal system is trying to get at some 
of the Suharto network's ill-gotten wealth.  That said, years 
of legal maneuvering probably lie ahead before even a rupiah 
is collected.  If nothing else, the court's ruling on the 
foundation's liability basically confirms what most 
Indonesians have long suspected--the Suhartos used 
foundations like Supersemar to rack up public money and dish 
it out to themselves and their cronies.  The exoneration of 
the Suharto family, however, was a bit galling.  The case 
provides yet another example of the apparent reluctance of 
Indonesian courts to sanction the late president and his 
family, even after his death (ref B). 
 
HUME