POLITICAL RISKS AT A GLANCE

Mining firm Freeport McMoRan continues to face large reputation damage through its cooperation with the Indonesian Military

Recent investigations by prominent multinational NGO’s into Indonesian military affairs show that soldiers use violent and abusive methods to advance their business partners interests. In addition local TNI commanders are known to be involved in illegal activities such as drug and wildlife smuggling, illegal logging and prostitution. Without knowing what local commander a firm is dealing with, it face considerable reputation risk.  U.S. based mining firm Freeport McMoRan who runs the world’s largest goldmine in Papua made security related payments to Indonesia's military of around US$60 million in 2004 with at least a third directly to individual commanders and units. The US Securities and Exchange Commission and Justice Department has been called to investigate.