An Environmental Problem For Brisbane Roar
By Eric EllisFebruary 23, 2012
In these troubled times for Australian soccer, an Indonesian oligarch has stepped up to buy the Brisbane Roar club. Back home, his name is mud.
They do things differently at the Football Federation of Australia, the peak administrator of soccer in Australia.
Where the clubs of the competing Australian Football League behemoth democratically boast that their millions of supporters and members are their owners, the FFA prefers what might be described as the oligarch-plaything model.
Most of Australian soccer's 10 A-League clubs are privately owned and licensed, by some of the country's richest - and most quixotic - people. Resources moguls such as Nathan Tinkler and Clive Palmer own teams, the Newcastle Jets and Gold Coast United, respectively.
The mogul system seems to work in England, but football there also has the advantage of being the country's most popular sport. Premier League clubs such as Chelsea and Manchester City have prospered from the deep pockets of Russian resources magnate Roman Abramovich and the Abu Dhabi oil royals.
But in Australia, soccer is a very poor relation to AFL, National Rugby League and rugby union's Super 15s. And the oligarch model is proving to be problematic, as the FFA boss Ben Buckley is painfully discovering on the Gold Coast.
Presently Buckley is watching from the bleachers as Gold Coast United's owner Clive Palmer toys with the FFA's future - and the Gold Coast's and possibly the A-League's, too. Soccer, Palmer declared in Brisbane's Sunday Mail Feb. 19, is "a hopeless game." Rugby league, he said, is "a much better game". .
The perilously funded FFA has threatened legal action against Palmer, with talk he'll be stripped of the licence. But the strident mogul says, bring it on. As the billionaire taunted on the ABC this week, "I've unfortunately been involved in business - as you do in major transactions - in over 68 litigations in my life, and fortunately our record is 68 to zero."
It's all in marked contrast to the sleek machine that is the AFL behemoth, about to embark on another bumper season.
The AFL throws up noisy characters including Jeff Kennett, the "Mouth from the South" ex-Victorian premier, at pukka Hawthorn, and the ubiquitous Eddie McGuire at pugnacious Collingwood.
But both are temporary. Kennett and McGuire don't own their clubs - the clubs own themselves and will go on without them. Ultimately, they all perform to AFL ringmaster Andrew Demetriou's tune, and he manages a multi-billion dollar circus, one of the world's most successful sporting bodies.
Were it thus for Ben Buckley.
So if the oligarch model is so fraught in Australia, why would the FFA sell its competition's most successful franchise, the Brisbane Roar, to another oligarch, this time an Indonesian one in the form of mining titan Aburizal Bakrie and his family's Bakrie Group?
Aburizal Bakrie is one of Indonesia's most controversial men, whose company many believe responsible for one of the world's biggest environmental accidents, a disaster that has killed many and displaced thousands.
A wily backroom politico who controls Indonesia's biggest political party - the old Suharto fief, Golkar, of which he is chairman - Bakrie is also a billionaire with a history of being in and out of financial difficulties. He's gone close to the wall a few times, only to fall into the warm embrace of the Indonesian state, in a country where he is one of its king-making powerbrokers.
So is it appropriate that the Bakries should own Australia's most successful football club, which last November set a record 36-game unbeaten streak, unrivalled in any Australian football code? As they battle yet another business drama back home, are they another accident-in-waiting for the FFA, one that could've been avoided?
Buckley's FFA didn't respond to The Global Mail's inquiries. And when we asked the chief executive of the Brisbane Roar football club, Michael Bowers, if he knew of Bakrie's chequered past, he said, "Personally? Nothing." But since Bakrie completed the Roar purchase from the FFA, Bowers knows a bit more - in part because The Global Mail informed him.
It only takes a few clicks to alight on the very public details of Bakrie's murky background: the claims of corruption, tax fraud and environmental outrages, trademark corporate shenanigans, and chummy deals.
A mining oligarch and one of Asia's richest men, Aburizal Bakrie's name is mud in Indonesia. Literally.
That's because in May 2006 an oil well that was majority owned and operated by Bakrie Group, and spudded in a semi-rural rice paddy of eastern Java, exploded into a mud volcano hell, engulfing thousands of Indonesians. At least 13 people lost their lives.
Since then, it's been a nightmare that won't end; homes lost, lives upended and livelihoods too. A vast tract of eastern Java is a putrid no-go area, where locals smoke their beloved kretek cigarettes at their peril lest they go up in an inferno of noxious fumes.
It is one of the worlds most appalling environmental accidents, akin to the 2010 disaster of BP's Deepwater Horizon in the Gulf of Mexico.
But it didn't happen in the West, it happened in Indonesia, on the outskirts of its second biggest city, Surabaya, in a third-world country where the legal system is the best money can buy, where accountability is often laughable. And at Jakarta's shadowy intersections of politics and money, that means that no-one takes formal responsibility for it. Indonesia is the country where the political and economic elite lack a national shame gene, where influence and cash can obtain any outcome one desires.
Indonesians call the mud volcano Lusi, combining the first syllable of the Bahasa word for mud - lumpur - with the first part of its location, Sidoarjo, a district 30 kilometres south of Surabaya.
At the peak of its flow, Bakrie's Lusi field was gushing out the equivalent of 50 Olympic-sized swimming pools of hot steaming sulphurous mud a day. It's still emitting about 5 to 10 pools a day, and will do so until at least 2037, by the best scientific estimates.
A toxic mud lake has submerged an area of about 25 square kilometres, straining at jerry-built and repeatedly rebuilt levees the height of a four-storey building. But this is Indonesia, and the slapdash barriers can come apart near as soon as they are assembled. Lusi has displaced hundreds of thousands of people, and now it's disrupting the main road and rail arteries through eastern Java and onto Bali, one of Indonesia's most vital economic corridors.
As hundreds of new mud volcanoes form around the mudflow, Lusi's flammability is such that the Indonesia's state railway has been moved to plead that passengers on trains passing by the spill refrain from hurling cigarette butts from the windows.
Aburizal Bakrie was Indonesia's Minister of People's Welfare at the time of the Lusi eruption - a billionaire who was effectively the Minister for the Poor, of which Indonesia has many.
His position as a powerbroker in Suharto's Golkar party, which backed the neophyte general Susilo Bambang Yudhoyono's 2004 presidential campaign, made him a coalition partner of SBY's government. As Lusi's mud flew, actually and metaphorically, the elusive Bakrie was hard to shift. For SBY, Bakrie was too powerful to burn. It helps that Bakrie is Indonesia's most prominent ethnic pribumi, or indigenous, tycoon, an old Suharto crony in an economy controversially dominated by ethnic Chinese cukongs.
Lusi was a test of Indonesian post-reformasi accountability. When Lusi blew, the Bakries blamed the Jogjakarta earthquake 300 kilometres away of two days earlier for unsettling the ground around the well. Since then, they've assembled reams of science that claims to disprove any culpability on their part. Bakrie-owned media has helped spread the message. But respected geologists from around the world who've examined the site maintain the rupture was most likely caused by human error.
So far the Bakries say they've paid out about $400 million to victims as gestures of goodwill, though the group denies any liability. Claimants say that's a fraction of what is due, and that most people haven't seen a rupiah of compensation. Court action is slowly wending its way through a legal system regarded as one of the world's most corrupt. In 2009, Indonesia's Supreme Court exonerated the Bakrie-owned subsidiary which operated the Sidoarjo field where the Lusi mud volcano erupted. Meanwhile the Lusi mud continues to flow, now just another part of the Javanese landscape.
Bakrie was a kingmaker for President Susilo Bambang Yudhoyono's election in 2004. National institutions genuinely reaching across Indonesia's farflung archipelago are few, and Bakrie is a bigwig in two of them, Golkar and Kadin, big business's chamber of commerce. Both were deployed in favour of SBY in 2004, providing the island-wide spread that SBY's fledgling Democrat Party simply didn't have outside Indonesia's bigger cities.
When Suharto ruled, it was virtually a patriotic duty to embrace the yellow-hued Golkar. Indonesia was effectively a one-party junta, with Golkar providing the national manifesto. In 2004, SBY's incumbent opponent, Megawati Sukarnoputri, campaigned as a champion of the poor. SBY had the plutocratic Kadin, the business chamber, in his camp.
When he won, SBY gave Bakrie the economic ministry. Bakrie lasted barely a year in the post before being relegated to the welfare portfolio, a job that put him in charge of state handouts to the poor.
That enabled Bakrie to position himself as their benefactor, as he directed government handouts from his office in a rambling Dutch-era government building opposite the Istana Merdeka, the presidential palace that Bakrie covets in downtown Jakarta, a building well accustomed to bailing him out.
This writer interviewed Bakrie in December 2008, while he and his family were in crisis. His family's mining house, Bumi Resources, was then tottering under the weight of enormous debt. Anxious foreign bankers were threatening foreclosure and the Bakrie Group stocks were in freefall.
It looked like a rerun of 1998-99, when the Indonesian economy collapsed and Bakrie's debts were taken under the wing of the government's bank restructuring authority, a crisis from which the Bakries would emerge stronger than ever, in control of key coal mining concessions in Kalimantan. And he was threatening to sue Jakarta's fearless Tempo magazine for publishing a cover caricature of him with the numbers 666 embossed on his temple. It was around this time that the Bakries acquired the Surabaya Post, the newspaper published closest to the site of the Lusi mudflow.
Coming in the midst of the global financial crisis, Bumi's meltdown was a calamity for the Bakries, and they warned it could take wobbly Indonesia with it. But as a minister of state, such corporate affairs shouldn't have mattered to him. He frequently insisted to anyone asking, that he'd had nothing to do with the family business since 2004, when he joined the government.
Bakrie's eyes darted between the stockmarket ticker displays on his desk, with the CNBC business channel beaming in the corner, as I asked him if he'd ever done business whilst he was a minister.
"I have never done that! Never! Never!" he insisted. "I am no longer a businessman. I know what [my family] is doing, but I'm not a businessman at all. I have devoted four years of my life to this job. I have never been involved in any business discussion."
He picked up a Koran and drew his hand to his chest. "Hand on heart, no!" he said. "What I am doing is contributing to my country, a contribution to God, that's all." And then he admitted, "I go to the company office to pray, yes. And if in the evening my brothers would like to report, yes, we discuss, that's all."
And as the stench built around Bakrie over Lusi, SBY's Democrat Party was able to improve its standing in 2009 polls to the point that he didn't need Bakrie on the team any more.
Bakrie left his cabinet post but tightened his hold over Golkar, with an eye on the 2014 presidential polls. Golkar rounded on SBY's highly-regarded Finance Minister Sri Mulyani Indrawati, an anti-corruption crusader.
In the end, a fed-up Mulyani gave up, resigning from the government to take the Asian deputy managing director slot at the World Bank in Washington.
Not long after came another chapter in Indonesia's relationship with the Bakries. In 2010, the shares of Bakrie group companies took a dive when a $400 million discrepancy was found in Bumi's official figures filed to market authorities to be analysed by investors so as to form investment decisions. The Bakries claimed it was a software error, some corrupt formatting in a spreadsheet.
Around the same time, during a corruption probe, a whistle-blowing former tax department official named Bakrie-linked companies as having paid bribes to tax officials avoid paying millions of dollars in state taxes.
The manner in which SBY's Indonesia has dealt with the Lusi spill and the Bakries is in sharp contrast to how Obama's Washington handled the Deepwater Horizon disaster.
BP was pressured into paying USD20 billion into a "spill response fund". The Bakrie Group sought to shuffle Lapindo Brantas - the subsidiary which operated the Sidoarjo field where the Lusi mud volcano erupted - into a Jersey shelf company. SBY persuaded the Bakries to front up a compensation package, albeit one regarded as slow and inadequate to the victims. BP shares slumped in the wake of Deepwater Horizon, so much so that market analysts speculated the oil giant might go under. In Jakarta, the Bakrie Group has experienced no significant business side effects from the Lusi spill.
US President Barack Obama wasted no time in savaging BP. After Lusi's mud deluge started in 2006, President Yudhoyono kept Bakrie in his cabinet as Minister for People's Welfare, with no irony apparently intended. Where BP suffered international condemnation and consumer boycotts, the Bakrie Group patriarch inches ever closer to the presidency, his ambition fuelled by his family's enormous fortune.
Aburizal Bakrie is positioning the formidable Golkar machinery to propel him to the presidency in 2014. In December, the man Indonesians know as "Ical" dismissed concerns that the Lusi stink would torpedo his candidacy.
"[The Sidoarjo mudflow] is not a burden for us," he said, claiming to have resolved 90 per cent of compensation claims. He said his companies had paid compensation 20 times more than the real value of victim's assets. The mudflow disaster, he said, was "no more than a business transaction".
Back at the Roar, CEO Michael Bowers believes Bakrie is in for the long haul. He says the Indonesians are focussed entirely on football, and sees a brilliant future for the club in Indonesia, where Bakrie owns a number of football franchises. There's talk of football academies in Europe, South America and Australia too. It's all upbeat, Bowers says.
Though Bakrie is in dispute with the British tycoon Nat Rothschild over an Indonesian resources deal, Bowers says he isn't aware of any financial dramas his new owners are experiencing.
But could the corporate dramas that Bakrie is experiencing back home impact the future of Brisbane Roar? "One can never say never," Bowers says, "but they have so far been exemplary owners."