Indonesia: What Did Mobil Know?

Mass graves suggest a brutal war on local Indonesian guerrillas--in the oil giant's backyard columns

There are days when Teungku Bintara wonders how he ever survived. For six months in 1990 and 1991 he languished in a military prison camp in Indonesia's Aceh province. One day, Bintara, then the headman of a nearby village, was put inside a room whose walls were splattered with human blood and hair. During an interrogation that left him blind in the right eye, Bintara claims an Indonesian army officer whipped his scalp with a frayed cable, burned his pubic hair with a match, and held live electric wires to his genitals and temples. Another time, the officer threatened to execute Bintara if he did not disclose the name of a Muslim separatist guerrilla leader, despite Bintara's insistence he didn't know him.

Bintara's gruesome experience unfolded only a few hundred yards from the chemical plants and white storage tanks of P.T. Arun, a liquefied natural-gas (LNG) producer In which Indonesia's state-owned oil monopoly, Pertamina, holds a controlling 55% stake and Mobil Corp. owns 35%. At the time of Bintara's detention, the plant employed 1,800 workers and was frequented by several Mobil advisers. Human rights groups have documented Rancong as a known torture site. But Mobil says it was not aware of any such activity. Bintara claims he saw fellow inmates in the Rancong camp being tortured and then tossed "like dogs" onto trucks.

TERRIBLE TALES. Today, all that remains of Rancong is a crumbling clusteR of row houses. But what happened at Rancong and throughout Aceh eight years ago is very much a live issue in Indonesia. Since the fall of strongman President Suharto in May, a stream of witnesses such as Bintara have come forward with tales of atrocities committed by Indonesia's military. The events occurred during a three-decade campaign to suppress a guerrilla movement that sought independence for Indonesia's westernmost province. The survivors' tales raise questions about what Mobil knew and when. On Oct. 10, a coalition of 17 Indonesian human rights organizations issued a statement asserting that Mobil and P.T. Arun are "responsible for human rights abuses" during the military operation in Aceh.

The groups allege Mobil Oil Indonesia, Mobil's wholly owned subsidiary, provided crucial logistic support to the army, including earth-moving equipment that was used to dig mass graves. One such grave excavated in the village of Bukit Sentang contained at least a dozen bodies. Another allegation is that security forces seized a local Mobil employee on company property without a warrant. That employee has not been seen since.

Mobil and Pertamina flatly deny allegations that they knew of any human rights abuses in the Aceh area in the early 1990s. "I can frankly say that we have no knowledge of that happening," says Neil Duffin, executive vice-president for production and exploration of Mobil Oil Indonesia (MOI). Pertamina Public Relations General Manager A. Sidick Nitikusuma says that "incidents connected to human rights violations were beyond Pertamina and MOI's authority and knowledge." The Indonesian army, which is helping excavate the graves, officially says it regrets any suffering. But it has not said the bodies uncovered were its victims.

News of these incidents is breaking into the wider world. U.S. Ambassador to Indonesia Stapleton Roy discussed the allegations on Nov. 3 in Jakarta with visiting Mobil Chairman Lucio A. Noto, who denied knowledge of any misuse of Mobil equipment or facilities. A State Dept. official told BUSINESS WEEK that the U.S. government has "expressed concern" about the allegations and is calling for Indonesian authorities to conduct a "full investigation." "The U.S. continues to monitor the situation," the official said. "Allegations of abuses should be investigated by the country concerned."

The controversy is likely to grow as more graves are opened and bodies found. Indonesian human rights organizations and government officials, who now are receiving some help from the military, say they so far have identified 12 mass graves. One grave is on Pertamina-owned land that is less than three miles from a Mobil gas-drilling site. Whether this site contains human remains will be known when the government exhumes it next year. So far, officials have unearthed remains in 6 of the 12 sites. Other suspected graves in close proximity to Mobil operations, such as at Rancong, have not been investigated. Indonesian human rights commission member B.N. Marbun estimates that at least 2,000 Acehnese torture victims--most of them civilians--are buried around the Aceh area.

TURMOIL. The discoveries typify the ethical issues that a growing number of multinationals must confront after years of doing business in Third World dictatorships. While there is no legal precedent for holding companies legally accountable in troubled circumstances, there is debate on what moral responsibilities multinationals have overseas.

To find out what happened, BUSINESS WEEK conducted a five-week-investigation of the allegations against Mobil. The probe included three trips to the Aceh area and dozens of interviews with torture victims, government officials, residents of villages near the mass graves, and local and foreign contractors who worked for Mobil and P.T. Arun. BUSINESS WEEK also spoke with several Indonesians who worked on Mobil facilities in Aceh. Mobil answered written questions and allowed a tour of the Aceh facilities. Mobil representatives accompanied a BUSINESS WEEK reporter to alleged grave sites. Finally, Mobil's headquarters in Fairfax, Va. provided detailed responses to questions from BUSINESS WEEK's reporters and editors.

This probe uncovered more than a dozen sources who either witnessed atrocities or came upon their aftermath. Two contractors say they told local Mobil managers that they had found human body parts close to Mobil sites, for example. And a former Mobil employee says rumors of massacres and of reports that Mobil equipment was being used to dig graves were frequently discussed at workplaces and in a company cafeteria. Yet there is no clear evidence that Mobil's top management had direct knowledge of such reports.

PEACEFUL PURPOSES. Mobil does say that it loaned the army excavators and supplied troops with food and fuel on occasion for three decades. But it insists Mobil managers had no record that the army was using this help for anything but peaceful purposes. Mobil also says it has no record of the army using its maintenance facilities or other buildings, as human rights groups allege. Instead, Duffin says, Mobil was told that any equipment used was "for projects beneficial to the community," such as building roads. If facilities and equipment were used for other reasons, he adds, "I don't believe we can be held responsible." On Nov. 5, Noto said at a press conference in Jakarta: "If anything happened because somebody used the equipment in a wrong way, I'm sorry about that." Noto added that Mobil had "no control over that."

In a letter to BUSINESS WEEK, the company describes the ambiguities of its situation. "Did we know we were operating in the middle of a conflict? Of course we did, and so did the world. ...[But] based on our inquiries and search of records, no reports from Mobil's national employees on the alleged mass graves and other military human rights abuses in the area were brought forward to Mobil's management in Indonesia." Mobil says if it had known of abuses associated with its operations, it would have protested aggressively.

Mobil also points out that it does not own any of the facilities in its own oil-and-gas operations in Aceh. All real estate and buildings where Mobil and P.T. Arun operate are owned by Pertamina. Also, most of the equipment used by Mobil in Indonesia is either leased from outside contractors or owned by Pertamina. At its $3 billion LNG venture, meanwhile, Arun's Pertamina-appointed management had control of the property.

Those interviewed in Aceh argue that the military operation was too big and talk of killings too widespread for the company not to know. "There wasn't a single person in Aceh who didn't know that massacres were taking place," says H. Sayed Mudhahar, a former top government official in Aceh. "From children to the elderly to the mentally ill, everybody was afraid." In the early 1980s, before the killings, Sayed had been a public relations manager for P.T. Arun. Faisal Putra, an attorney in Lhokseumawe who intends to file a suit against Mobil on behalf of victims, agrees: "The crimes occurred over a long period of time. Mobil Oil cannot utter the words, `We didn't know."'

Yet many ambiguities remain. Several Acehnese victims and witnesses identified by human rights activists as Mobil employees later turned out to be contractors. Almost everyone interviewed in Aceh declined to speak on the record. Their explanation was that, because Mobil and P.T. Arun so dominate the economy in Aceh, they feared they would not be able to find good jobs or win more contracts if their names were used. Others feared military reprisals.

Whatever actually occurred, the Indonesian government's campaign to quell separatist unrest dragged Mobil into a morass. The separatist rebellion traces its origins to four centuries of fierce Acehnese resistance against Dutch colonial rule. After Indonesia declared independence in 1945, Aceh's fight for autonomy was crushed by then-President Sukarno. Aceh plunged into wrenching poverty.

COMBAT TROOPS. Then came Mobil Oil's accidental discovery in 1971 of one of the world's richest onshore reserves of natural gas, estimated at 14 trillion cubic feet. The oil-and-gas industry quickly became the most important source of revenue for the central government in Jakarta, much to the resentment of Acehnese. Most of the top jobs and contracts went to ethnic Javanese. Despite dire local poverty, less than 10% of Aceh's wealth is invested back into the province, says Adinan Hashim, head of Aceh's Economic Planning Agency.

Following the opening of Mobil's P.T. Arun LNG joint venture in 1976, a guerrilla movement declared independence. Suharto sent troops into Aceh when villagers rioted and clashed with hundreds of settlers from Indonesia's main island of Java and started to block roads.

As violent clashes increased, troops started pouring in from Jakarta in May, 1990. Over the next few months, the force had reached thousands of soldiers and included the feared Army Special Forces with their signature red berets. "All of these new people coming in needed logistical support, so they went to all of the companies and began commandeering facilities," says former Aceh official Sayed. One such facility was Rancong, a vacated housing development for construction workers and Mobil employees at P.T. Arun.

The forces set up a base camp at an army facility known as Post A-13 in Landing, the site of Mobil's Arun gas field and a few minutes' drive from a Mobil airstrip and a housing compound known as Bachelor Camp.

Soon afterward, witnesses say, evidence of the military's gruesome handiwork was strewn everywhere. While traveling in late 1990 along a road leading to a Mobil oil well known as D2--19 miles southeast of Landing, a damage-claims inspector employed by a Mobil contractor came upon a vacant sugar plantation. Pigs were feeding on something in what appeared to be a bulldozed pit with dirt pushed over it. "They were obviously human bones," says the inspector, who spoke on condition his name not be used. "The pigs were rooting down there on a hip bone, around the white knobbly part." Javanese settlers in the area told him the army had rounded up and executed Acehnese villagers in retaliation for an attack on the settlement. The inspector says he informed a Mobil manager, who did not make a record of the incident. "The army is not somebody you argue with," explains the inspector. Mobil says it has no knowledge of the incident.

DUMP TRUCK. Along the same road a few months later, another Mobil contractor was part of a team testing soil samples outside of Dusun Cermai, a village of 600 people living in wood shacks with dirt floors, and about 2 1/2 miles from D2. As an excavator shoveled a mound of earth into a dump truck to be transported to a nearby Mobil construction site, the truck driver noticed a shoe lying on the ground. He jumped out of the cab, picked up the shoe, and collapsed in shock. It was attached to a severed human leg. The inspector reported the incident to a Mobil heavy-equipment supervisor at the construction office. "He had no reaction," says the contractor. "At that time, it was normal not to say anything, just keep quiet." Mobil says it has no records or knowledge of such a report.

This discovery was made near an area that was notable for its deep, wide crevices created by seismic activity. The locals have since named it "Skull Hill." The reason, they say, was hard to miss. The stench of rotting human flesh on Skull Hill could be smelled half a mile away. When Bil Maruf, headman of Dusun Cermai, went bird-hunting in the area one day, he found three corpses next to bulldozer tracks. Skull Hill is on a large expanse of land that Pertamina had acquired for Mobil to develop, although Mobil was not using the property at the time, says Jon W. Loader, Mobil's Asia public-relations manager. Still, a former Mobil employee and two current Mobil contractors say that company employees traveled that road every day in 1990 and 1991.

Around the same time, rumors spread of massacres in Bukit Sentang, a village about 15 miles away from Skull Hill. In 1991, Mobil used heavy equipment to widen a road that passed through the village, according to a former employee of Mobil's planning department who used the road to reach a Mobil-operated gas field farther south. "Every time I drove out there, the subcontractors stopped my car," says the source. "They said, `No, don't go out there. Don't you know the army is killing people and burying them in mass graves with Mobil equipment?"' This became a topic of lunchtime conversation at Mobil's Bachelor Camp mess hall, but it never went into an official report, he says. Mobil says it does not know of its equipment being used in that area.

Yusuf Kasim, a local farmer, knew the grounds well. He says the army paid him $4 a night to stand guard over a borrowed excavator to prevent anyone from siphoning fuel from its tank. He says he watched soldiers execute 60 to 70 blindfolded Acehnese men at a time with M-16 rifles, shooting them in the back so they tumbled face-first into a mass grave across the rice field from his house. He claims he recognized one victim, Sulaiman, as a Mobil contractor. Sulaiman had been held at the army barracks at Post A-13, which is across the street from a Mobil well. "The bullets didn't kill Sulaiman, so the soldiers ordered the backhoe operator to cut him in half with the shovel," Kasim recalls. Mobil says it has no knowledge of the man or the incident. In late August, the National Commission on Human Rights disinterred human remains at Bukit Sentang in a somber ceremony. An Aceh-based human rights group photographed villagers removing an intact pair of blue jeans from a skeleton.

VANISHED. Sulaiman was hardly the only Acehnese who disappeared. On July 10, 1990, an army officer walked into the office of Mobil's production department and walked out with T. Abdullah Baharuddin, a nine-year Mobil employee. A colleague later told his widow, Hasnidar, then nursing their one-month-old son, that the officer had first asked permission from Baharuddin's superiors but had no arrest warrant. So she complained to Baharuddin's boss and to a Mobil public-relations manager. More than a year later, on Aug. 21, 1991, Hasnidar finally received a letter from Mobil a year later. It said that Baharuddin's employment had been terminated and that he was to receive $3,500 in severance pay "in line with existing company policy." Detainees released from Rancong later told her they had seen Baharuddin there. Explains Loader: "Mobil did inquire through appropriate government channels of Baharuddin's status and learned that he had been detained by the authorities for security reasons." And Mobil points out that no company can stop lawful arrests on its premises.

P.T. Arun also says it had little control over Rancong once the military commandeered the facility in 1990. "They said they need to use our facilities for `security purposes.' We could say nothing," recalls a Pertamina official familiar with the plant. "They were the army." The army even asked P.T. Arun to donate sarongs--local garments--so that prisoners could wear them while praying at a company mosque. On Fridays, P.T. Arun employees prayed alongside pale, gaunt prisoners, he adds.

Given how tense the situation was, it is fair to ask what a company in Mobil's predicament should have done. If Mobil had witnessed human rights abuses in Aceh, the company says it would have protested such abuse to Pertamina and to Jakarta. It also says it would have referred issues involving potential criminal conduct to appropriate authorities. This is in line with what ethics experts suggest. "Any time a corporation is in the middle of human rights violations, it needs to say something," says Human Rights Watch Executive Director for Asia Sidney Jones. "They don't have to be public about it."


But say the worst is true--that Mobil knew of the killings and did nothing. In terms of a company's legal responsibility, U.S. law is murky because there is no precedent. The Alien Tort Claims Act allows U.S. companies to be sued for wrongful actions committed overseas. In the last few years, human rights organizations and foreign victims have filed suits in U.S. courts seeking damages for activities by Royal Dutch Shell in Nigeria, Unocal in Burma, and Texaco in Ecuador. The cases remain in the courts.

Meanwhile, Mobil's operations are going strong in the Aceh area, and its business there remains a lifeline for the struggling Indonesian economy. And as the country painfully examines its past, all those in Aceh--villagers, soldiers, and corporations--must come to grips with a terrible legacy.