11-16-10 Obama’s Indonesia & Mine


Although President Obama only lived in Indonesia for four years, and that as a youngster, he was received like returning royalty.  A suddenly active volcano shortened the schedule but it could not diminish the enthusiasm which greeted the President and First Lady.

Obama used the occasion to cement relations with the Indonesian government, an important Asian trading partner and the world’s most populous Muslim country. Indonesia is an important banking center, and a key to US efforts to stabilize the world economy. Obama took the extra-ordinary step of promoting Indonesia for a permanent seat on the UN Security Council.  The historic corruption drew scant official attention.

I was a principal speaker at the 1991 meeting of the Southeast Asia Central Bankers Association.  I had written a paper about the four “tigers” of Asian banking – Indonesia, Malaysia, Hong Kong and Singapore, and, had added a compendium noting that the heads of the seven largest central banks in Asia were all ethnic Chinese.  Those of us who dealt in financial intelligence were not surprised when China sought investment in the ‘90s to rebuild Harbin china, historically the most Westernized of Chinese cities.  Japan offered help but only if Japanese equipment etc were bought and/or used.  The United States offered financial aid – with strings attached eg human rights concessions etc.  Singapore, under Lee K Yuan, universally known as LKY, offered cash for development, no conditions.  I had dinner in Singapore in the penthouse suite of LKY’s minister of finance, Kho Bin Sang, which was served personally to me by his deputy minister, the infamous (in banking circles) tall Eurasian beauty, Madam Nu, known to me as Gloria.  The very personal side of Asian banking politics was explained to me through these associations.

My speech to the bankers in Jakarta focused heavily on money laundering, using examples of how the Chinese concept of fei chin has been raised to an art form.  Doubted that I was having much of an impression on these mandarins, whose focus at that meeting was on off-sheet balances and derivatives.  In a post-conference memo to the Federal Reserve, I warned that the ethnic Chinese penchant for high risk gambling was penetrating Asian banking.  To be sure, a young trader at Berings bankrupted that ancient British bank, betting the wrong way on the yen.

I had one of my more embarrassing moments icw that conference.  One night, they bussed all the delegates to an upscale restaurant outside Jakarta.  As we boarded the bus, an aide to the head of the Bank of China informed that the old gentleman wanted to meet with me about the reforms advocated by the Paris-based Financial Action Task Force; I chaired the FATF external policy committee and was eager to engage the Chinese.  Spying the old man sitting alone on the bus, I took the adjoining seat and launched into my pitch.  He smiled and nodded; then the aide came forward to tell me that the old man did not speak English.  I was invited to come to Beijing.

My focus on Indonesia went well beyond pinstripe set pieces, much to the disgruntlement of our embassy officials.  There had been a time when commodity traders in Jakarta, supported by a son of the president, tried to corner the spice market, with the intent of driving up prices on the futures market.  That manipulation was thwarted.

A few months after that 1991 conference, I received and acted on a tip that the Mafia had gained access to the international codes for “trusted” telexes, the instruments used for bank-to-bank transfers.  Standard Chartered of Indonesia was being asked to provide a customer with $300 million in negotiable letters of credit and $30 million in cash, all US dollars.  A Standard Chartered official in Jakarta signed off on the transfer, but did not have enough dollars on hand, so he sought funds from the larger SC bank in Hong Kong, which alerted London.  The head of security for the home office was a retired SI6 agent of my acquaintance.  When I heard the details, I agreed with Grant that this was an inside deal using stolen codes.  I sent cables to that effect to Jakarta and Hong Kong.  I informed our embassy that the scam had the backing of another son of the President.  Our embassy did not like being told about royal negatives.  The transfer was aborted;  at a dinner the next year in Oxford, where I was lecturing at Christ Church college, Standard Chartered hosted a dinner to thank me for saving them $300 million.

But, if that incident rankled official sensitivities, my next involvement with Indonesia was a bomb shell.  I picked up the South China Morning Post one day, which had a photo of a “major financier” from Vanuatu being greeted by Indonesian officialdom, accompanied by a story which said the financier would be creating a financial institution in Jakarta.  I called an old China hand in DEA and faxed him a copy of the Post; he too instantly spotted our old friend Sammy K as the financier, a former heroin trafficker from Hong Kong who more recently had been laundering drug money through Vanuatu.  I also alerted British intelligence in Asia which contacted its people in Jakarta and Hong Kong.  The “bank” never opened.  Our embassy again lambasted me for interfering with internal Indonesian affairs.

Such financial shenanigans were not uncommon in Asia.  During the Eighties, two enterprising young men created the Nugan Hand Bank, which had banking offices in Australia and Amsterdam, with outlets in Hong Kong, Indonesia and the Philippines.  They offered banking services to the international drug trade, and others seeking to move “untraceable” funds.  Alas, one of their customers was the CIA.  When the scheme was broken, Nugan went home to Australia and committed suicide. John Michael Hand allegedly disappeared, but I was verbally censured by a US Deputy Attorney General for offering my views at a meeting in Hong Kong about his probable fate.

Unfortunately, I made one trip too many to Indonesia – this time into the jungle.  One night, the main course was marinated raw python – which was not made known to me before or after I ate it.  However, I became ill on a flight the next night to Tokyo, large sores erupting on my arms and legs and all over my torso.  State Department doctors and private practitioners agreed I was suffering from a rare form of hives, and for six years I was treated with prednisone, which can cause diabetes.  Finally, the suffering (and incredible itching) demanded a different approach and I went back to Indonesia.  A two-second analysis by this lady doctor informed me that I had “buma thura” – the snake disease.  Medical name: gnathastoma spinigerium.  That finding was confirmed by the Center for Disease Control – along with the advisory that it was incurable.  Indeed, in Asia, the natives drink boiled kerosene at the first sign, scalds out your system.  If it goes longer, and spreads to the brain, Asian doctors perform lobotomies.  CDC says I have lived longer with this disease than any other human being, to their knowledge.  Johns Hopkins says it does not know how to test for it, much less treat it. 

Sometimes, I am really sick – but, I have survived wars, revolutions, two attempts on my life, two bad marriages, cancer, diabetes and one of the world’s rarest diseases – and still look forward to tomorrow. 

A Secretary of State was once asked, why, given the thousands of State Department and CIA personnel who have endured diseases all over the world, am I the only one who contracted this disease.  His answer:  “Rayburn is the only person who ever ate a raw python.”  (I think he inserted “dumb enough” in there.)


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