Indonesia’s Constitutional Court (Mahkamah Konstitusi) has barred the central government from purchasing a 7% stake in Newmont Mining’s Indonesian assets. According to The Jakarta Post, the majority argued that the government needed to submit the purchase to the House of Representatives (DPR) first for inclusion into the budget.
However, the decision was a close, with 4 dissenters. The dissenters argued that the state has a constitutional obligation under Article 33 to own and manage natural resources (as exemplified by the 2004 Electricity case).
It seems like the majority opinion focused on the procedural issue of legislative approval, not whether the state can purchase the shares. The case does not include any concurring opinions, so it is not yet clear to me whether the majority would refuse to uphold the sale next year if the DPR includes it in the budget.
Full decision (in Indonesian) available here.
A couple of years ago, I wrote an article in the Georgetown International Environmental Law Review
about the Indonesian government’s prosecution of Newmont Mining Corporation
for pollution in Buyat Bay. In the article (which you can download here
), I discussed the court’s use of scientific evidence and conclude that the judges got it right in acquitting the company. The judges detailed the scientific evidence, presented evidence from both sides, and accepted the evidence that had the most credibility (and the prosecution’s evidence suffered severe credibility problems). However, my background in environmental sciences is minimal, so I had to trust the scientific conclusions of others.
Fortunately, a new report by Indonesian and Australian scientists has reaffirmed the court’s verdict. According to Asia Sentinel, the authors concluded that arsenic and mercury standards in the bay did not exceed Indonesian or international standards. Moreover, they state:
“We also compared fish captured within 10 kilometers of the area with those captured in other coastal areas, and their heavy metal contents were also very low,” Amin Soebandrio, a scientist from the University of Indonesia, told reporters.
However, not all environmentalists are buying the reports conclusions:
“We proposed for them to check on the impact on fish by breeding them on site. We also asked them to examine cells on the algae, but not one of our considerations was included,” said Rignolda Djamaluddin, director of Manado-based Kelola Foundation, who has participated in the Buyat research since the beginning. “They also did not include the impact on the ground, whether the pollution had reached people’s wells to cause so many diseases.”
The report’s authors responded that, if the oceans did not have increased levels of pollutants, then wells would certainly not, given that they’re generally far inland.
The central problem is that neither side has much faith in the Indonesian court system. Environmentalists view them as subject to corruption and capture. Denise Leith wrote a fascinating book about another mining company, Freeport, and its misdeeds in Indonesia. For Newmont, the judiciary’s horrible reputation reduces the value of any court verdict – which is one reason why yet another scientific report was needed to confirm the court’s acquittal of Newmont. The optimist in me hopes this dynamic will produce a coalition in favor of judicial reform – one in which defendants and plaintiffs both realize that a clean judicial verdict comes with authority and is worth more than one obtained through corruption. Alas, I don’t think domestic companies will face the same pressures and public relations nightmare as Newmont – especially because they, unlike Newmont, face lower risks in engaging in corruption (such as the U.S. Foreign Corrupt Practices Act) and are more familiar with the local context (such as knowing which judges owe which companies favors).