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Copper and gold: the blood diamonds of West Papua

Categories: Accountability, ACT Government, Asia-Pacific, Corporate profit, Corporate responsibility, Corruption, Discrimination/Racism, Ernst & Young, Government, Human Rights, Indonesia, Mining, Racism, West Papua

by: Bakchos
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Invaded by Indonesia in 1961, West Papua is the crisis on Australia’s doorstep. The conflict generated by the usurpation of the former Dutch protectorate is not recognized as anything other than a separatist movement by those in power in the international community, but it is so very much more. Since the Act of No Choice in 1969 in which 1025 West Papuans voted under extreme duress unanimously in favour of the ceding of sovereignty to Indonesia, the Free Papua Movement has sought to regain what they believed to be their future – independence. This was no pipe dream, but a concept fed and driven by the Dutch themselves and supported by Australian aid workers. That is, until the United States became involved, seeking to strengthen ties with the Indonesian state and Australia lacked the gumption to stand on its own against its adopted Big Brother. Australia abandoned West Papua, just as it abandoned East Timor, but that at least is one failure that this country has attempted to amend.

Freeport McMoRan first signed a contract with Indonesia to mine near Puncak Jaya, the highest mountain in Papua in 1967, before the Act of No Choice was even held. By 1973, the mine was fully operational and production has continued to grow ever since, but the quality of life of the native West Papuans has not, lending weight to the guerilla separatist movement known as Organisasi Papua Merdeka (OPM), or Free West Papua. Support for the movement has grown with the progressive abuses of the rights of indigenous West Papuans, subjected to physical and psychological humiliation including rape, torture, being forced to hop on their haunches like rabbits or commando crawl across the ground, or quite simply being beaten. There are numerous video and written accounts of abuses by Indonesian troops and police. Such belittling acts designed to break the spirits of the individuals captured and to undermine confidence in the movement have so far failed to break OPM. But the movement must fight not only the terrorists with guns, but also those complicit in the support of such actions.

Freeport Indonesia, partially owned by the Indonesian government (9%) contributes 1.6% to the nation’s GDP. The strike by miners at the Grasberg mine late last year cost the country severely, losing revenue from up to 70 million pounds of copper and 100,000 ounces of gold. The miners were not being paid an exorbitant amount; between $2.10 & $3.50 per hour (some have suggested even as little as $1.50). No matter the comparison, such an income range is deplorable. At the highest rate, assuming a 40 hour working week and a 52 week year with no leave taken, the annual income would be $7,280. With the 37% increase agreed to in December of 2011, that annual wage would increase to $9,974 per annum.

In an essay for the World Bank’s Institutional Pathways to Equity published in 2008, Ross states that no country with an average annual income above US$11,175 suffered from violent conflict. In listing six major factors contributing to conflict in mineral rich countries, he also points to a separate pre-existing identity of the native people of the region being exploited.  West Papua fits five, if not all six of the structural risk factors identified by Ross as underpinning secessionist conflict.

The appalling rates of pay, the abuse of rights and the denial of identity all feed into the problems eating at the heart of the West Papuan people. The underlying cause of the conflict is the minerals and it is the minerals that entice the Indonesian government to keep sending troops and police to the troubled region. Freeport pay the Indonesian government for security forces to protect their workers and help ensure production, but they also pay police directly, a fact admitted by National Police Chief Gen. Timur Pradopo. Such ex gratia payments in excess of wages can only be seen in one way – corruption. It is at this point that one must consider that the conflict in West Papua is in fact driven by conflict minerals. Like the DRC and Zimbabwe, Indonesian forces are benefiting from the trade of minerals. It is in fact in the interests of individuals within the Indonesian military and police to generate conflict rather than to keep the peace, for in doing so they ensure the unstable environment that lines their pockets with the trappings of the new LCD that they’ll be able to buy when they return to their Javanese homes.

This leads on to the question, who monitors the payments made by Freeport? That company would be Ernst & Young, a company already identified as dismissive of indigenous rights by their treatment of the former Commissioner for ACT Revenue and prepared to ignore accountability for missing public monies, evidenced by their complicity in the cover up of the missing monies from ACT Treasury and the ACT Department of Urban Services (see letter, Page 1 & Page 2).

Ernst & Young took over from Arthur Andersen accountants in 2002 as Freeport McMoRan’s independent registered accountants and have continued in the role since. Arthur Andersen had been Freeport’s accountants since 1988 with most of it’s operations in the USA being absorbed into the remaining big four accounting firms when Andersen’s was found guilty of failing to properly audit Enron, the Texan energy company that went bankrupt in 2001. Andersen’s successors provide representation on committees regarding conflict minerals and have audited the sale of diamonds from Zimbabwe as approved through the Kimberley Process in August 2010. They have touted their diversity and corporate responsibility credentials and yet, they not only abandon the indigenous people in their sights, but actively support the denigration and destruction of the lives of people who wish nothing more than to live with dignity and respect.

When the treatment of native West Papuans by Indonesian forces is repeatedly reported, when videos keep surfacing demonstrating the horrific treatment of those captured by groups such as Kopassus, when the government security forces are paid direct bribes for their services in West Papua, one can only wonder at why they would wish to be involved with Freeport. It’s a simple equation, underpinned by a simple answer: avarice. Man, in my opinion at least, is inherently greedy. We keep our mouths shut, our noses out of the business of others and our eyes and ears closed. Not at all like Blake and his fly. But that is the very means by which abuses of human rights are allowed to happen. Accountability is hard when you’re on the winning side of the equation. It’s easier to slap the fly than think about the right of the insect irritating your bright summer’s day. It’s just an insect, of no consequence. It offers nothing to the world, to my world, that is of value.

One can only wonder how Ernst & Young account for those payments not on the books. Swat, swat. Go away little fly!

Will you sign the petition calling for a Royal Commission into the Australian Federal Police?


  1. Anne another great post, Ernst and Young, the Australian Federal Police Rio Tinto, the ADF, there all complicit in the Indonesian organised genocide of the indigenous people of West Papua, it’s people like you and Bakchos who are prepared to put everything on the line for someone else’s rights that makes this planet we ALL call home just that little bit more bearable. Ernst and Young in particular should be ashamed of the way they make money from someone else’s suffering. Hopefully Kama will catch up with them!

  2. Anne what a fantastic post. The issues you raise about conflict minerals in West Papua are equally applicable to the situation in Australia, especially the FMG/YAC sage. You are certainly helping shine a light on the issues confronting indigenous cultures in the region.

  3. Jenifer Trees Anyone who deals with the output of a conflict area is complicit in the atrocities that form part of any conflict. Ernst and Young as one of the successor firms of Arthur Anderson have been complicit in the West Papuan genocide for many years now. When EY absorbed AA they must have been aware of what Indonesia was doing in West Papua, they approached these issues with their eyes wide shut, and this is complicity! EY how about showing some corporate leadership and speak out against the genocide in West Papua. Bill Coe I agree with you on the Australian especially the FMG/YAC sage!

  4. It’s all about corporate responsibility and accountability, EY is in a position to show leadership on this issue, will it step up to the mark? Only time will tell, but there is an opportunity for one of the world’s leading accounting firms to be seen to be doing the moral thing. Time to show moral leadership EY!

  5. An Interesting analysis of the issues. How far do you see complicity as going? Would you for example argue that people who do business with Ernst and Young are complicit in the West Papuan genocide? I would be interested to know how far you see complicity as going.

  6. Tom Ashby The concept of complicity extends tp all those, no matter how far removed they are from the actual event, who benefit from that event. In this case anyone who deals with Ernst and Young is complicit in what Ernst and Young is helping continue in West Papua – genocide is the word, shall I say it again genocide! A big nasty word, all who beefit are guilty!

  7. Bill Wheatley The point you make about how far complicity goes is only to true. I wish the rest of the world would realise that about Aboriginal land and minerals in Oz as well.

  8. Bill Wheatley Yes the concept is we accept that it exists or that the obligations exist, extend to all those who benefit and to those who support those who benefit. Its a BIG obligation!

  9. Anne Shiny via Facebook says:

    Hi, Tom. If you take the concept of the BDS campaign, then complicity is very widespread. People boycott Max Brenner because he supplies chocolate to the IDF. One example of many. Would I boycott EY because of their services to Freeport? Yes, but my reasons are closer to home than that and they extend from the threats on BnB in the not so distant past by faceless men in the pillowcases.

    The sorts of behaviour that allow corporations to harm others can only be changed if we hit their hip pocket. If we buy their products despite their human rights record, we are saying that we do not care about the people who are abused for our cushy lifestyle. To this end, I’m going to point out this rather serendipitous post from my friend Kim about Nestle, that has generated a to of discussion on her own site. This lady takes no shit from no-one! http://frogpondsrock.com/2012/02/a-question-of-personal-ethics/

  10. Anne I think that you are right, if we as individuals stop supporting companies that deal with those who do the wrong thing, we might be able to modify their behaviour.

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