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Cablegate: East Java Mudflow Update: Government Takes Over Mitigation,

VZCZCXRO6634
RR RUEHCHI RUEHCN RUEHDT RUEHHM
DE RUEHJS #0113 3280427
ZNR UUUUU ZZH
R 240427Z NOV 09
FM AMCONSUL SURABAYA
TO RUEHJA/AMEMBASSY JAKARTA 0487
RUEHC/SECSTATE WASHDC 0497
INFO RUEHZS/ASSOCIATION OF SOUTHEAST ASIAN NATIONS
RUEHBY/AMEMBASSY CANBERRA 0222
RHHMUNA/HQ USPACOM HONOLULU HI
RUEHJS/AMCONSUL SURABAYA 0510
RUEHWL/AMEMBASSY WELLINGTON 0190

UNCLAS SURABAYA 000113

SIPDIS

E.O. 12958: N/A
TAGS: ECON EPET EINV SENV ENRG SOSI PGOV ID
SUBJECT: EAST JAVA MUDFLOW UPDATE: GOVERNMENT TAKES OVER MITIGATION,
VICTIM COMPENSATION PROCEEDS AT A DELAYED PACE

REF: A. A. SURABAYA 66 AND PREVIOUS (GOVERNMENT PLANS TO TAKE RESPONSIBILITY FOR MITIGATION)
B. B. JAKARTA 1699 AND PREVIOUS (KEY PARTY PICKS NEW LEADER)

1. SBU(U) SUMMARY: The Indonesian government has taken over full
responsibility for mitigation efforts at the Sidoarjo mudflow
disaster. Due to financial difficulties, Lapindo has not met
the original compensation deadline. However, most victims have
accepted an installment payment system that Lapindo is
optimistic it will be able to meet. Bakrie frames Lapindo's
compensation payments as "charity" to avoid the implication of
guilt.

2. (U) In the aftermath of the Sidoarjo mudflow disaster in
2006, the President of Indonesia tasked Lapindo Brantas with the
responsibility of funding mitigation efforts and compensating
victims for their lost property. In July of 2009, the
Indonesian Parliament required that the government completely
take over mitigation responsibility (reftel A). The government
agency responsible for dealing with the mudflow disaster, BPLS,
confirmed that it assumed full responsibility for all mitigation
efforts in September.

3. (U) Lapindo's only remaining financial obligation is to
compensate victims for their lost property. The original
deadline for compensation was 2008. However, Lapindo claims
that a combination of financial difficulties brought on by the
international financial crisis and imprecise land ownership
documents prevented them from meeting this deadline. In order
to cope with the financial difficulties Lapindo has resorted to
an installment system, paying victims approximately $1,500 per
month. Bambang Mahargyanto, president of the subsidiary company
Lapindo established to adminster compensation payments, says
that Lapindo will complete compensation payments for over 60% of
the victims in December of 2009 and will finish all compensation
payments by 2012.

4. (U) Even one of the harshest critics of the compensation
process is on board. Suranto claims to be the spokesman for a
group of 563 families who have experienced delays in receiving
their compensation payments. While he has consistently
criticized Lapindo and owner Abdurizal Bakrie due to delays in
the compensation process, he said the families he represents now
accept the installment process. However, Suranto remained
skeptical of claims that Lapindo doesn't have enough money to
pay the required amounts at once. He pointed out that Bakrie
recently spent "huge" amounts of money to become the new
chairman of Golkar (reftel B). He asked, "If he can spend that
much money on Golkar, why can't he spend money on us?"

5. (SBU) Bakrie continues to insist that the mudflow was a
natural disaster. He points to a series of judicial decisions
that have absolved his guilt (reftel A). He insists that his
efforts to help the victims of the mudflow disaster are charity,
and that his decision to help stems from his mother's request
that he aid the disaster victims. Following Bakrie's lead,
Bambang said that Lapindo does not refer to their activities as
"compensation" since this implies guilt. Rather, the company
uses terms such as "corporate social responsibility," "financial
assistance," or even "donation." Khoirul Huda, a spokesman for
3150 families of mudflow victims, agreed with this assessment,
and insisted that all of the mudflow victims are grateful for
Bakrie's assistance even though the disaster "was not his
fault." Regardless of the motivation behind the compensation,
or the word used to describe it, Bakrie stated in September 2009
that his family had already spent around $620 million on
"charitable activities" for mudflow victims and plans to spend
another $240 million.

MCCLELLAND

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