draining development.pdf - Khazar University

The Kleptocrat’s Portfolio Decisions 435Tommy Suharto, Son of President Suharto of IndonesiaIntroductionTommy Suharto’s father was president of Indonesia for 30 years, from1968 to 1998; he died in 2008. It was alleged by Time Magazine, in anarticle published a few months after Suharto was deposed, that, duringhis 30 years in office, his family had acquired cash and assets in excess ofUS$70 billion. 17 By the time he was deposed, Time Magazine reckonedthat the family controlled assets worth US$15 billion. Of these assets, itwas estimated that the president’s favorite son, Tommy, controlled nearlyUS$1 billion.Transfer of fundsIn July 1998, scarcely a month after his father’s resignation as president,Tommy Suharto opened an account with the Guernsey office of BNPParibas (Suisse) SA in the name of Garnet Investments Limited, a companyincorporated in British Virgin Islands. Between August 1998 andJune 1999, some £8 million and US$59 million were paid into Garnetaccounts at BNP in Guernsey.In July 2002, Tommy Suharto was convicted in Indonesia of thefollowing:• Unlawfully possessing fire arms and ammunition• Arranging the murder, on July 26, 2001, of Supreme Court JudgeSyafiuddin Kartasasmita, who had convicted him of corruption onSeptember 22, 2000• Preventing a public servant from performing his duty (by failing tosurrender to serve his sentence after his conviction for corruption andthe rejection of his petition for clemency)In October 2002, while Tommy was in prison following his convictionfor the above offenses, Garnet instructed BNP to make payments fromits accounts totaling €36 million. BNP had previously notified Guernsey’sfinancial intelligence unit, the Financial Intelligence Service (FIS),of its suspicion that Tommy Suharto was involved in corruption. BNPaccordingly sought consent from the FIS to make the payments requestedby Garnet. In November 2002, the FIS refused consent and has done soever since. Therefore, BNP declined to make the payments.