A joint statement by the Commission for the Disappearances and Victims of Violence (KontraS) and the Asian Human Rights Commission (AHRC)
The Indonesian government is planning to provide an Rp 781 Billion (USD 62 Million) loan to PT Minarak Lapindo Jaya (MLJ), a national company, to complete the compensation to victims of the mudflow disaster (known as Lapindo Mudflows) in Sidoarjo Regency, East Java Province, Indonesia. MLJ oil drilling in 2006 caused the mudflow disaster.
The report of National Commission on Human Rights (Komnas HAM) on the Lapindo Mudflows shows that the 29 May 2006 mudflow destroyed and sank nine villages in Sidoarjo, East Java Province. In August 2006, the mud flooded other villages in Porong, Jabon, and Tanggulangin, Sidoarjo Regency, East Java Province. In addition, around 10.426 units of houses and seventy-seven places of worship sank in the mudflow. It also destroyed 25.61 ha of sugarcane land in villages such as Renokenongo, Jatirejo, and Kedungcangkring, and damaged 172.39 ha of rice fields in Siring, Renokenongo, Jatirejo, Kedungbendo, Sentul, Besuki, and Pejarakan Jabon. Furthermore, the mudflows also led to the Pertamina gas pipeline explosion on 22 November 2006. The gas explosion injured 14 fourteen people.
The Lapindo Mudflows wreaked havoc and violated numerous rights, for instance: Article 7 of the Economic, Social and Cultural Rights (hereinafter referred as ICESCR), the enjoyment of just and favourable conditions of work; Article 11 of the ICESCR, on the adequate standard of living for self and family, which includes adequate food, clothing, and housing, and continuous improvement of living conditions; Article 12 of the ICESCR, on the enjoyment of the highest attainable standard of physical and mental health. The gas explosion also violated the right to life.
Given the nature of destruction and damage and the lack of adequate punishment, the government measure of giving a loan to MLJ Inc. will set a dangerous precedent. Rather than punishing the company for negligence, given that their business operation has had a disastrous impact on the economic, social, and cultural loss of the affected community, the government has chosen to assist the company by providing a loan.
Additionally, the report of the Supreme Audit Agency (known as BPK) indicates transgression on the licensing and monitoring of Banjarpanji-1 draw well, and the absence of monitoring of oil and gas exploration by BP Migas (the upstream oil and gas regulator) and also the Department of Ministry of Energy and Mineral Resources. PT Minarak Lapindo Jaya, a national company, has shown violations being committed in procedures and regulations, ranging from the tender process, the technical equipment, and the procedure of drilling oil wells in Sidoarjo. However, the government has not followed up with the BPK report.
KontraS and the AHRC have observed closely and noted how the government has attempted to bail out MLJ Inc., by offering an economic transaction and ignoring all the liabilities involved.
Therefore, the AHRC and KontraS call on the government not to bail out MLJ Inc. This move will only benefit a large conglomerate that incurred financial problems, the Bakrie Group. The loan is thus against the Constitution, in particular Article 33, Paragraph (4) of the 1945 Constitution. The Constitution emphasizes prosperity for all in society, and to avoid the accumulation of assets and economic concentration in a person, group, or company.
The AHRC and KontraS would also like to note that MLJ Inc. provided 1,000 hectares of land as collateral for the government loan, in order to compensate the victims of mudflows. However, the MLJ Inc. itself only has the right to cultivate (HGU), the right to build license (HGB), and right to manage this land. After a set time frame, the land will anyway be returned to the State if the Company does not make a fresh request for extension or renewal to be the rights holder.
Next, the two organisations would like to point out the unclear mechanism of the bail out gifted to MLJ Inc. According to Law no. 37 of 2004 on Bankruptcy and Suspension of Payment, and Law no. 17 of 2003 on State Finances, MLJ Inc. must have bankruptcy status before being granted a loan from the government to compensate victims of mudflows for the land and livelihoods lost.
Additionally, the compensation given, via government loan, only affects one of the groups. The other groups and communities affected by MLJ Inc. oil drilling have not been fully compensated.
Lastly, and most importantly, this flawed and incomplete financial compensation, on the back of a dubious financial bailout, is inadequate; it only partially addresses civil liability. MLJ Inc. must be held criminally liable for its actions, which have caused substantial suffering and destruction; this must happen without undue delay under the standard of fair trial.
