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Government to take over Lapindo's liabilities

Jakarta Post - December 9, 2014

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Lapindo disaster a 'human rights violation' - Jakarta Post. August 15, 2012
Kontras: Sidoarjo victim's TV apology to Bakrie is shameful - Jakarta Globe. July 27, 2012

Hasyim Widhiarto, Jakarta – After spending more than Rp 6 trillion (US$48.7 million) of taxpayers' money to help the Bakrie family resolve the Lapindo mudflow disaster in Sidoarjo, East Java, the government is mulling easing the family's burden further.

Public Works Minister Basuki Hadimuljono said on Monday that the government would plan to buy the assets of PT Minarak Lapindo Jaya, worth Rp 781 billion, so that the company could pay compensation that has already been delayed to thousands of victims of the mudflow.

"I've talked to Coordinating Economic Minister Sofyan Djalil and Cabinet Secretary Andi Widjajanto. Our plan is to take over the company's assets," said Basuki at the Presidential Palace.

"We will buy the assets and the company's proceeds from the purchase will be used to compensate the victims." He said the funds for the asset purchase would be taken from next year's state budget.

Minarak recently claimed it still needed to pay another Rp 781 billion of a required Rp 3.8 trillion in compensation to more than 4,000 victims who used to live within the affected area.

A Constitutional Court ruling issued earlier this year ordered the government to force Lapindo to complete payment of compensation to victims of the disaster.

The family's scion, Aburizal Bakrie, who is also Golkar Party chairman, has enjoyed the government's assistance between 2007 and 2014 in relation to the Lapindo disaster, which many believe was caused by drilling conducted by Lapindo, the family's firm, in 2006.

Former president Susilo Bambang Yudhoyono's administration allocated more than Rp 6 trillion to compensate villagers living in the vicinity of the so-called "affected area map", which was legalized via a presidential decree in 2007.

Such generous financial protection for the Bakrie Group was among the reasons that Golkar helped the Yudhoyono government remain stable in the face of nationwide protests at the president's generosity toward the conglomerate.

In 2007, the government also established the Sidoarjo Mudflow Mitigation Agency (BPLS) to handle and control the mud eruption, relocate people, recover infrastructure and supervise Lapindo in handling compensation for villagers in the affected area.

However, the 2015 state budget, which was passed during a House of Representatives plenary meeting in September, no longer mentions spending for the Lapindo mudflow.

Instead, the budget only stipulates that "the [central] government can give a grant to local governments for post-disaster rehabilitation and reconstruction".

Andi called last week on Minarak to immediately pay the Rp 781 billion compensation arrears to the Sidoarjo mudflow victims. Lapindo was given next year as a deadline.

Andi acknowledged that the government also had an obligation to pay the mudflow victims Rp 300 billion. However, he added, the payment would be made possible once Lapindo had settled its payment.

The government had committed to give compensation to residents who lived outside the mudflow-affected area, while victims who lived within the affected area were Lapindo's responsibility.

Source: http://www.thejakartapost.com/news/2014/12/09/govt-take-over-lapindo-s-liabilities.html.