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While leading a U.S. business delegation through Indonesia recently, Thomas Donahue, the head of the U.S. Chamber of Commerce commented on the Buyat Bay case saying, "Disposition of that case will most definitely have an impact on the foreign investment climate in Indonesia. Nothing is more fundamental to a good investment climate than the rule of law, sanctity of contracts and protection of individual rights in the legal system."
Similarly, a State Department Official when asked about the case during President Bush's recent visit to Indonesia remarked, "The United States hopes the remainder of the trial is conducted in a manner that respects the rule of law and takes into consideration the evidence presented during the trial. A verdict that is not supported by the evidence will send a signal to foreign investors that the Indonesian legal system does not fairly address business disputes."
Many legal analysts have seen the issue of the rule of law as central to the Buyat Bay Case. As Indonesia, under the Presidency of Susilo Bambang Yudyhono, has sought increased foreign investment to bring much needed growth, the question of rule of law has emerged as a considerable issue to consider before investing in Indonesia. Business publications such as the Wall Street Journal and Fortune have noted that investors are watching the case to see if rule of law is applied. In a recent AFP wire story, Senator Norm Coleman of Minnesota said in a letter to the Indonesian Attorney General, "Respect for the rule of law is critical to the political and economic relationship between our countries." Newmont Mining officials and lawyers defending the company have stated consistently that laws have not been followed or have been misapplied as the case has progressed from accusation to investigation to a trial.
Some of the specific examples where rule of law has not been followed include:
- Law 23/1997 under which Newmont was indicted is based on the principle of "Subsidiary Principle." The law states that before criminal charges can be filed, civil actions must take place first and that criminal actions are a last resort. This principle was not followed in the case.
- Joint Decree 77(a), issued under Law 23/1997, requires environmental cases be investigated by specialist environmental investigators. The Indonesian police disregarded this law and conducted their own investigation.
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The LCP law provides that the suspect has a right to present evidence to the Police that will exonerate him. Despite repeated requests during the investigation the Indonesian police refused to allow any evidence of innocence to be presented by Richard Ness or the company, ultimately leading to charges being filed. Furthermore, evidence obtained by the police in the course of their investigation that was favorable to Rick Ness was not included in the dossier given over to prosecutors. Despite repeated requests by defense lawyers to insert the exonerating evidence in the dossier this was never allowed and remains an issue to the present day.
- There is no provision in Indonesian criminal law that allows a President Director to be held responsible for unlawful acts of the company. The indictment does not allege any "action" or "active conduct" that led to a crime by Rick Ness as required in Articles 41-44.
- Article 20 of PTNMR's contract of work with the Government requires notice of any default or violation of permits and provides a right to fix any issues. Further article 21 requires any dispute to be resolved by mediation or arbitration. Newmont has yet to receive any notice of default and has been refused in its request for both sides to approach an arbitrator.
- Articles 43 and 44 of Law 23/1997 are clear that they apply to discharge of substances to "surface water" (i.e. fresh water). In the suit filed against Newmont these laws were used to measure "seawater."
- Areas of general and inconsistency:
- The indictment says the submarine tailings permit was invalid but then the same permit is used to calculate alleged exceedances.
- The indictment alleges that the submarine tailings permit was issued under GR 19/1999 and also that tailings are "B3" waste. But permits under GR 19/1999 cannot be issued for disposal of "B3" into the ocean.
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