CAPITALISM'S ACHILLES HEEL Dirty Money and How to

72 CAPITALISM’S ACHILLES HEEL
waive customs duties and sales taxes so he could price his imports one-third
lower than competing vehicles. 37
Tommy the all-too-visible playboy and his tinny little Timors were not
particularly popular in Indonesia. Driving the car and getting stuck in traffic
risked being set upon by angry youths wielding sticks and rods, beating the
thing into a pile of scrap. Thus, sales fell way below expectations. Tommy
leaned on the government to buy his inventory, resulting in a directive to
that effect issued to all departments and state institutions. 38
Granted “National Car” status, PT Timor Putra Nasional needed $1.3
billion to commence manufacturing. Tommy, lacking a sound loan repayment
record, was turned down by every foreign and local bank he approached.
For you or me, this might be somewhat discouraging, but not for
Tommy. He marched into the central bank and insisted on a state guarantee
of the requested $1.3 billion. The bank choked, but finally, backed by the
government, ordered 4 state banks and 12 private banks to provide the financing,
resulting in an offer of $690 million. 39 Work commenced on the
factory buildings, and production lines were imported, until the project was
finally cancelled in 1998.
The state banking system generally was ripe for picking by the Suharto
clan. No one could easily turn down their requests for multimillion-dollar
fundings. As a member of the National Development Planning Agency said
to me quietly in his office, “Being the son of a president or minister and getting
access to capital based on this heritage, that’s feudalism, not economic
democracy.” 40
The World Bank certainly understood these realities as early as the
1970s, continued lending through the 1980s, and even advanced more than
$300 million to the Indonesian government in the early 1990s on a promise
that banking procedures would be strengthened. The Indonesian government
leaped at the money, plowed it into the state banks, and distributed
much of it to the Suhartos all over again. An astute observer Michael Backman
wrote, “Thanks to the World Bank, the Soehartos had found a way to
pillage the funds of the international community and not just those of their
countrymen.” 41
In the midst of the country’s economic collapse, a highly respected official,
who later became minister of finance, met with me in Jakarta and said,
“In government, corporations, banks, all sectors, transparency is at the heart
of the current crisis. We don’t deserve this bad treatment on the basis of eco-