The impact of corporate strategy on community dynamics: A case study of the Freeport Mining Company in West Papua, Indonesia

International Journal on Minority and Group Rights

Volumn 11, Issue 1-2, 2004, Pages 115-142

  de Jesus Soares, Adérito ^a  

^a NEW YORK UNIVERSITY   (United States)

Author keywords

[No Author keywords available]

Indexed keywords

CIVIL SOCIETY; CORPORATE STRATEGY; LOCAL PARTICIPATION; MINING INDUSTRY; MULTINATIONAL ENTERPRISE; SOCIAL STRUCTURE;

ASIA; EASTERN HEMISPHERE; EURASIA; INDONESIA; IRIAN JAYA; SOUTHEAST ASIA; WORLD;

EID: 24344497907     PISSN: 13854879     EISSN: None     Source Type: Journal    
DOI: 10.1163/1571811041631263     Document Type: Review

References (126)

1. In this paper 'Freeport' refers to Freeport Indonesia, which operates in West Papua, Indonesia, and not to Freeport McMoran Copper and Gold Mines, its parent company in New Orleans, US unless otherwise stated.
2. Formerly known as Irian Jaya under Suharto's regime. After Suharto's resignation in 1998, the name of Irian Jaya was changed to West Papua, a name that is closely associated with the Free Papua Movement (OPM). This name was formally adopted by the new government under former President Abdurahman Wahid.
3. On 19 December 1961, the Three Commands of People (Tiga Komando Rakyat or Trikora) operation was launched by Indonesia's leader, Sukarno. The operation was aimed to 'return' West Papua to Indonesia from the Dutch colonial government. TRIKORA operation was continued by Mandala Commando lead by Suharto after he was appointed by Sukarno.
4. The involvement of the US government in initial discussions concerning Indonesia's assertion of sovereignty over West Papua included a visit by Attorney-General Robert Kennedy to Jakarta and the Hague in February 1962 to initiate talks between Indonesia and the Netherlands. Following this visit, a meeting of State parties was held on 20 March 1962 mediated by US Diplomat Ellsworth Bunker, which resulted in the rejection of the Luns Plan. J. Saltford, United Nations and the Indonesian Takeover of West Papua, 1962-1969: The Anatomy of a Betrayal (Routledge Curzon, London, 2002), p. 12.
5. A. Abrash and D. Kennedy, 'Repressive Mining in West Papua', in G. Evans et al. (eds.), Moving Mountains: Communities Confront Mining and Globalization (Oxford Press, Sydney, 2000), p. 59. Available online at visited on 8 January 2004.
6. Article XVIII of the agreement states: "Indonesia will make arrangements, which the assistance and participation of the United Nations Representative and his staff, to give the people of the territory the opportunity to exercise freedom of choice. Such arrangements will include ... the eligibility of all adults, male and female, not foreign nationals, to participate in the act of self determination to be carried out in accordance with international pratice, who are resident at the time of signing of the present Agreement and at the time of the time of the act of self determination".
7. Saltford, supra note 4, pp. 10-11.
8. I b i d.
9. The West Papua Independence Movement refers to the Act of Free Choice as 'Act of No Choice'.
10. The assumption was that each member represented 750 West Papuan inhabitants.
11. Ironically, Fernando Ortiz Sans as the representative of the UN, agreed with the musyawarah concept in conducting the ballot as in one of his press statement after the ballot in Merauke, claimed that, musyawarah system was 'practical'. See Saltford, supra note 4, p. 161.
12. "One of the UN officials involved has since described it as a 'whitewash' which 'trampled' on the rights of the Papuans", Associated Press, quoted in: International Crisis Group (ICG), Indonesia: Resources and Conflict in Papua, (Asia Report No. 39 (International Crisis Group, Jarkarta/Brussels, 2002) p. 1.
13. Saltford, supra note 4, p. 144. The involvement of the US government in initial discussions concerning Indonesia's assertion of sovereignty over West Papua included a visit by Attorney-General Robert Kennedy to Jakarta and the Hague in February 1962 to initiate talks between Indonesia and the Netherlands. Following this visit, a meeting of State parties was held on 20 March 1962 mediated by US Diplomat Ellsworth Bunker, which resulted in the rejection of the Luns Plan. J. Saltford, United Nations and the Indonesian Takeover of West Papua, 1962-1969: The Anatomy of a Betrayal (Routledge Curzon, London, 2002), p. 12.
14. Quoted in Saltford, ibid., p. 166, footnote 53.
15. International Crisis Group, supra note 12, p. 6. "One of the UN officials involved has since described it as a 'whitewash' which 'trampled' on the rights of the Papuans", Associated Press, quoted in: International Crisis Group (ICG), Indonesia: Resources and Conflict in Papua, (Asia Report No. 39 (International Crisis Group, Jarkarta/ Brussels, 2002) p. 1.
16. R. Osborn, Indonesia's Secret War: The Guerilla Struggle in Irian Jaya, (Allen and Unwin, Sydney, 1985).
17. For example, at the second congress of the West Papuan people, in June 2000, which was attended by 25,000 Papuans, participants called for steps to rectify history (meluruskan sejarah). In the eyes of the Papuan Presidium Council (PDP) the 1969 Act of Free Choice was conducted under circumstances of coercion and intimidation. See Council on Foreign Relations, Indonesian Commission: Peace and Progress In Papua (Council for Foreign Relations, New York, 2003), p. 84.
18. The Papuan Council is an independent organization established by Papuans. The Chairperson of the Presidium, Theys Eluay, was assassinated by members of Indonesian Special Military Force (KOPASSUS) on 11 November 2001. (See International Crisis Group, supra note 12). Theys Eluay was replaced by Tom Beanal, the leader of the Amungme Tribal Council (LEMASA), one of the most prominent local groups opposing Freeport's operation in West Papua. He later joined the Freeport Board of Commissioners.
19. See J. Levinson, 'Indonesia's Odyssey: A Nation's Long, Perilous Journey to the Rule of Law and Democracy', 18 Arizona Journal of International and Comparative Law (2001), p. 103.
20. Papuan Special Autonomy Law (Law No. 21/2001), 23 October, 2001.
21. Council for Foreign Relations, supra note 16, p. 42. R. Osborn, Indonesia's Secret War: The Guerilla Struggle in Irian Jaya, (Allen and Unwin, Sydney, 1985).
22. C. Gabrielson, 'Harsh Reality in West Papua', ICWA Letters, 1 November 2002 (The Institute of Current World Affairs, Hanover, 2002).
23. A survey conducted by The International Foundation for Election Systems (IFES), demonstrated that only 17 per cent of Papuans were aware of the special autonomy law (see J. Rumbiak, Papua: Development Affecting Conflict Resolution, Analysis And Recommendations For Actions, address to the Fourth International Solidarity Conference for West Papua, in New Zealand, 12-19 August 2003 (unpublished)). Commenting on the survey, Rumbiak states that, "this indicates that there has been relatively no socialization of existence, meaning or implications of special autonomy in Papua" (Rumbiak, ibid.). Regardless the pro and contra on Special Autonomy Law, President Megawati's government has introduced a new bill (President Instruction No. 1/2003) on the acceleration of the division of West Papua into three provinces as the further implementation of Regulation No. 45/1999 on the Division of West Papua. Megawati's policy, as stated by Rumbiak, is a violation of the special autonomy law and has created more confusion, escalated tension and provoked widespread popular demonstration in opposition to the order (see John Rumbiak, ibid.). that only 17 per cent of Papuans were aware of the special autonomy law (see J. Rumbiak, Papua: Development Affecting Conflict Resolution, Analysis And Recommendations For Actions, address to the Fourth International Solidarity Conference for West Papua, in New Zealand, 12-19 August 2003 (unpublished)).
24. Commenting on the survey, Rumbiak states that, "this indicates that there has been relatively no socialization of existence, meaning or implications of special autonomy in Papua" (Rumbiak, ibid.).
25. Regardless the pro and contra on Special Autonomy Law, President Megawati's government has introduced a new bill (President Instruction No. 1/2003) on the acceleration of the division of West Papua into three provinces as the further implementation of Regulation No. 45/1999 on the Division of West Papua. Megawati's policy, as stated by Rumbiak, is a violation of the special autonomy law and has created more confusion, escalated tension and provoked widespread popular demonstration in opposition to the order (see John Rumbiak, ibid.).
26. A riot took place in Timika in August 2003 in response to the government's announcement that it wanted to divide West Papua into three provinces. Since then, the government has indicated that it will review the Presidential Decree No. 1/2003. T. Siboro and N. D. Somba, 'Government postpones plan to divide Papua', The Jakarta Post, 28 August 2003. Available at , visited on 7 January 2004. So, as this paper is being written, the status of government in West Papua is still in legal limbo.
27. See Jaringan Advokasi Tambang, Kontroversi Re-Negosiasi Kontrak Karya PT Freeport Indonesia (4 August 2003), available at , visited on 7 January 2004
28. and see 'Contracts and Communities', Down to Earth, No. 45, May 2000, available at visited on 7 January 2004.
29. D. Leith, The Politics of Power: Freeport in Suharto's Indonesia (University of Hawaii Press, Honolulu, 2003), p. 60.
30. A. Abrash, Observations On Human Rights Conditions In The PT Freeport Indonesia Contract Of Work Areas With Recommendations (Robert F. Kennedy Memorial Center for Human Rights, July 2002) available at visited on 8 January 2004.
31. Leith, supra note 25, pp. 59-60.
32. Abrash and Kennedy, supra note 5, p. 56.
33. Leith, supra note 25, p. 60.
34. I b i d.
35. Ibid., pp. 60-61.
36. Abrash and Kennedy, supra note 5, online version,
37. "Land and water and the natural riches therein shall be controlled by the State and shall be made use of for the greatest welfare of the people". See Article 33 of the Indonesia's 1945 Constitution and see also Article 33 point 3 of The 1945 Constitution of the Republic of Indonesia as amended by the Fourth Amendment of 2002.
38. See Abrash and Kennedy, supra note 5 online version,
39. see also, Leith, supra note 25, pp. 85-86.
40. Abrash and Kennedy, ibid., p. 5 Abrash and Kennedy, supra note 5, p. 56.
41. and see also Leith, ibid., p. 86.
42. Leith, ibid., p. 88.
43. The tension between these tribes will be further discussed later in this article.
44. This arrangement and the model which preceded it, are discussed in the latter part of this article.
45. See Freeport-McMoRan Copper and Gold, Land rights recognition programs, available on visited on 8 January 2004.
46. I b i d.
47. See C. Ballard, 'The Denial Of Traditional Land Rights In West Papua', 26:3 Cultural Survival Quarterly (2002) available at visited on 8 January 2004.
48. Leith, supra note 25, p. 43.
49. E. B. Kapstein, 'The Corporate Ethics Crusade', 80:5 Foreign Affairs (2001), p. 106.
50. M. K. Addo, 'Human Rights And Transnational Corporations - An Introduction', in M. K. Addo (ed.), Human Rights Standards And The Corporate Responsibility Of Transnational Corporations (Kluwer Law International, The Hague, 1999), p. 31.
51. C. Avery, 'Business and Human Rights in a Time of Change', in M. T. Kamminga and S. Z. Zarifi (eds.), Liability of Multinational Corporations Under International Law (Kluwer Law International, The Hague, 2000), p. 25.
52. Addo, supra note 44, p. 13.
53. UN Secretary General Kofi Annan proposed the 'Global Compact' during the meeting in Davos World Economy Forum in 1999. Annan challenged MNC leaderships to support and respect the protection of internationally proclaimed human rights within their sphere of influence. See Avery, supra note 45, p. 32, also available on visited on 8 January 2004.
54. In addition to the Global Compact, the UN Sub-Commission for the Promotion and Protection of Human Rights recently approved the 'Draft Norms of the Responsibility of Transnational Corporations and Other Businesses with Regard to Human Rights' UN Doc. E/CN.4/Sub.2/2003/12/ Rev.2 (2003), available at visited on 8 January 2004.
55. According to NGOs, by adopting these new norms, the UN has filled a gap by pulling together into one document the key international human rights laws, standards, and best practices applying to all businesses. See Human Rights Watch, Nongovernmental Organization Welcome the New U.N. Norms on Transnational Business, 13 August 2003 available on .
56. See Amnesty International's 'Human Rights Principles for Companies': Amnesty International, Human Rights Principles for Companies, 1 January 1998, available at: visited on 8 January 2004.
57. See also P. Alston and H. J. Steiner, International Human Rights in Context: Law, Politics, Morals (Oxford, New York, 2000) p. 1351.
58. Human Rights Watch proposed several principles regarding corporate responsibility, including: 1) Emphasizing the commitment to the rule of law which underlies respect of human rights; 2) Protesting restrictions on civil and political rights (for example: freedom of expression, association, or assembly); 3) Using influence with governments to raise concerns about human rights violations; and 5) Respecting and protecting the basic human rights, including labour rights, of their employees. See Avery, supra note 45, p. 39. C. Avery, 'Business and Human Rights in a Time of Change', in M. T. Kamminga and S. Z. Zarifi (eds.), Liability of Multinational Corporations Under International Law (Kluwer Law International, The Hague, 2000), p. 25.
59. Norms on the Responsibilities of Transnational Corporations and Other Business Enterprises with Regard to Human Rights, supra note 47, principle No. 10. UN Secretary General Kofi Annan proposed the 'Global Compact' during the meeting in Davos World Economy Forum in 1999. Annan challenged MNC leaderships to support and respect the protection of internationally proclaimed human rights within their sphere of influence. See Avery, supra note 45, p. 32, also available on visited on 8 January 2004.
60. See Addo, supra note 44.
61. According to Koh, there are at least four clear benefits derived from integrating human rights, labour and environmental standards into business practices. 1. It strengthens the rule of law and the capacity of the civil society organizations. 2. Public-private partnerships are key to ensuring that community development programmes funded by companies are transparent and sustainable over the long term. 3. It improves the business environment by setting a positive example and enhancing corporate reputation and image in the public eye. 4. It diminishes security risks to personnel and equipment. Companies may be less at risk for strikes, demonstration and attacks if an open dialogue is maintained with local stakeholders. H. H. Koh, 'The Role of Corporate Social Responsibility in the Promotion of Democracy and Human Rights', remarks made at 'Social Accountability International', New York, 7 December 2000. .
62. W. Loomis, 'The Responsibility of Parent Corporations for the Human Rights Violations of Their Subsidiaries', in Addo (ed.), supra note 44, p. 145.
63. Ifdal Kasim, 'Ke Arah Undang-Undang Pertambangan yang Mengakui Hak Masyrarakat Adat', in Menggugat Posisi Masyarakat Adat Terhadap Negara, Alliance of Indigenous Peoples of the Archipelago and Lembaga Studi Pers dan Pembangunan (AMAN and LSPP), Jakarta, 1999.
64. See Dianto Bachriadi, Konflik Agraria: Petunjuk untuk dijalankannya pembaruan agraria, in , and Ballard, supra note 45. C. Avery, 'Business and Human Rights in a Time of Change', in M. T. Kamminga and S. Z. Zarifi (eds.), Liability of Multinational Corporations Under International Law (Kluwer Law International, The Hague, 2000), p. 25.
65. and Ballard, supra note 45.
66. See for instance, L. McCulloch, 'Trifungsi: The Role of the Indonesian Military in Business', in J. Brömmelhörster and W. C. Paes, Soldiers in Business: The Military as an Economic Actor (Palgrave Macmillan, Basingstoke, 2003) p. 94
67. and J. A. Winters, Power in Motions: Capital Mobility and the Indonesian State (Cornel University Press, Ithaca, 1996)
68. and see also Leith, supra note 25.
69. Following Freeport's report, several national NGOs in Indonesia have appealed to the Indonesian National Human Rights Commission to conduct a further investigation regarding human rights violations committed by the Indonesian Military and Freeport.
70. See Press release on the Report of The National Commission of Human Rights, 22 September 1995, Jakarta, available at , visited on 8 January 2004.
71. According to the Robert F. Kennedy Memorial Center for Human Rights, more than 150 cases of individual killings of indigenous people in and around the mine have been recorded since the 1970s, with hundreds more additional deaths from illness and injury caused by forced relocation and military attacks. (see 'Freeport Killings Spark Clamp-Down on Human Rights Defenders', 55 Down to Earth (2002), available at , visited on 8 January 2004).
72. In East Timor during the Indonesian occupation, each village had its own Babinsa. In other parts of Indonesia, one Babinsa might cover several villages. See TAPOL (The Indonesian Human Rights Campaign), East Timor Under Indonesian Jackboot, An analysis of Indonesian Army Documents, Tapol Occasional Report, No. 26, October 1998. Available at visited on 8 January 2004.
73. See TAPOL (The Indonesian Human Rights Campaign), 'The Military and the Arrogance of Power', 166/7 TAPOL Bulletin (2002), available at visited on 8 January 2004.
74. See McCulloch, supra note 56.
75. See comments made by Anas Saidi of the Indonesian Institute of Science, Jakarta, reported in: 'Military's Internal Reform Efforts Mere Lip Service, Observers Say', Jakarta Post, 3 June 2002.
76. See C. Budiardjo, Indonesia's Territorial Integrity and the TNI's Role In Crushing Separatism (2003) TAPOL available in visited on 8 January 2004.
77. The lawsuit was based on the US laws: Alien Tort Claim Act (ATCA) and Torture Victim Protection Act (TVPA). The lawsuit was dismissed as the judge found no ground specifically on the concept of cultural genocide and environmental destruction in international law as argued by the plaintiff. However, the case is significant because the court decided that it had the jurisdiction to try the case.
78. I will address this issue further in the section of this paper that deals with Freeport's One Percent Trust Fund policy.
79. N. Tebay, The Role of the Catholic Church in Defending and Promoting Human Rights in West Papua, Paper presented at the International workshop at the European Parliament: Indonesia: Between Regional Autonomy and Military Rule, 25 April 2002, available at: visited on 8 January 2004.
80. Leith identified three phases of development in Timika by Freeport. The first phase took place from 1967-1991. In this phase, Freeport showed little interest in dealing with the local community's demands. In the second phase, from 1991-1995 Freeport started to give serious attention to the demands of local people. This phase also was marked by the publicity of various human rights violations that took place in the mining area. The third phase, from 1995 up to the present was marked by development and implementation of the One Percent Trust Fund. See Leith, supra note 25, pp. 97-118.
81. Leith, supra note 25, pp. 98-99.
82. This policy was adopted by the Board Directors of Freeport-McMoRan Company Copper and Gold Inc. (FCX) in its meeting on 4 February 1999: Freeport-McMoRan Copper and Gold Inc. (FCX), Human Rights Policy and Implementation, available at: visited on 8 January 2004. The design and implementation of the policy has been criticized by human rights organization, see RFK Center and Amnesty International-USA Critique US Mining Company Freeport McMoRan's Social and Human Rights Policy: visited on 8 January 2004.
83. See International Crisis Group, supra note 12, p. 18.
84. See, Australian Council for Overseas Aid, Trouble at Freeport: Eyewitness account of West Papuan resistance to the Freeport-McMoRan mine in Irian Jaya, Indonesia and Indonesian Military repression: June 1994-February 1995 (AFCOA, Canberra, 1995).
85. Abrash and Kennedy, supra note 5, online version, pp. 4-5.
86. Ibid., p. 5.
87. The two lawsuits were filed on behalf of Tom Beanala and Yosepha Alomang. Both are the leaders of LEMASA.
88. Human Rights Policy and Implementation, supra note 75.
89. I b i d.
90. I. Yaluwo, Peranan Lembaga Swadaya Masyarakat Dalam Pengelolaan Dana PT. FI (NGO's role in managing PT FI's fund) unpublished thesis for master degree in political science, Sam Ratulangi University, Manado, Indonesia, p. 5, 1999.
91. Ibid., pp 74-75.
92. As this article is written, the Special Autonomy Law, designed to provide more power to the local governments is still under debate. No clarity has yet been reached on the proposed implementation of a new relationship between central and local government.
93. Yaluwo, supra note 77, pp. 74-75.
94. Ibid., p. 66.
95. See, Freeport McMoRan Copper and Gold, Freeport Partnership Fund for Community Development visited on 8 January 2004.
96. Leith, supra note 25, p. 165.
97. Yaluwo, supra note 77, pp. 69-70, 128-129.
98. Leith, supra note 25, p. 93.
99. Yaluwo, supra note 77, pp. 84-85.
100. The other five tribes live in Mimika District, but in different sub-districts.
101. See International Crisis Group, supra note 12, p. 20
102. and also Yaluwo, supra note 77, p. 66.
103. Abrash, supra note 5, p. 2. However, in the process, LEMASA changed its policy by working closely with Freeport. This will be explored in greater detail below.
104. Yaluwo, supra note 77, p. 88.
105. International Crisis Group supra note 12, p. 20.
106. Ibid., p. 19.
107. Yaluwo, supra note 77, p. 58.
108. Later Yoppy Kilangin 'left' LPM-IRJA. It was not clear why he left LPM-IRJA. He then made a very strong comment regarding the One Percent Trust Fund (see his comment below).
109. Tom Beanal, quoted by Abigail Abrash in A. Abrash, 'The Amungme, Kamoro & Freeport: How Indigenous Papuans Have Resisted the World's Largest Gold and Copper Mine.' Volume 25, No. 1 Cultural Survival Quarterly, last visited 8 January 2004.
110. Tom Beanal signed on behalf of LEMASA and Yacobus Owamena on behalf of LEMASKO.
111. See, 'Freeport Still Getting Away With It', Down to Earth, No. 47, November 2000, last visited 8 January 2004.
112. See, West Papua Freedom leaders reject Freeport's blandishment - May 3, 2001, Mines and Communities Website, last visited 8 January 2004.
113. See, Freeport-McMoRan Copper and Gold Incs, Working Toward Sustainable Development Report, 2002 Economic, Social and Environmental Report, available on Freeport McMoRan's website at: last visited 8 January 2004.
114. I b i d.
115. I bi d.
116. In its report Freeport mentioned several projects such as the establishment of hospitals in Timika and Banti which treat thousands of patients each year; the LPMAK education programme which currently provides scholarship or educational assistance to approximately 3,700 students; and villages based programmes which have provided electricity, water, church facilities and other infra-structure to remote villages in the highlands of Papua.
117. Interview with John Rumbiak in New York, 5 April 2003.
118. I b i d.
119. I b i d.
120. Author e-mail communication with Sem Rumbrar, 12 April 2003.
121. I b i d.
122. I b i d.
123. See G. Wandita, 'Tambang dan Perempuan: Sebuah Kritik Terhadap Industri Tambang dan Advokasinya' in Menggugat Posisi Masyarakat Adat Terhadap Negara, (Kongres Masyarakat Adat Nusantara dan LSPP, Jakarta, 1999).
124. Leith, supra note 25, p. 115.
125. Ibid., p. 115.
126. This includes Freeport support to the Indonesian military since its operation from the first contract of work.