Facing charges of embezzlement, deception and theft after a business deal turned sour, Australian Dennis Connell could spend the next five years in an Indonesian prison.
Connell, 63, from Wyong on the NSW central coast, who has lived in Indonesia for 15 years, says the case is a warning sign to all Australians with business interests in Indonesia.
“I got caught like a spider in a web,” he said from his cell at Jakarta’s Cipinang prison. “Contracts here are not worth the paper they are printed on.”
In March 2009, Connell signed a deal to sell 75 per cent of his mining services company PT Indo Asia Resources to Burnahuddin Bur Maras, a wealthy Indonesian businessperson and former politician for $2.475 million.
Connell said that, 22 months later, he had still not received a cent.
“I was getting to the end of my tether and I said to him, ‘Look I need the money,’” he said.
Under a settlement deal reached in January last year, full control of the company returned to Connell, and 25 shares in an offshore entity bought under the company were transferred to Maras.
Golden Arrow Resources, the offshore entity in question, controls the Masuparia gold concession in Kalimantan through a local contractor.
In a technicality that he said was legally watertight but has led to the criminal charges in the Indonesian courts, Connell sold 49,975 authorised, but yet-to-be issued shares in Golden Arrow for $5 million after the settlement. He says he made no money from the sale.
Maras’s ownership in the offshore entity and its lucrative local contractor – which he believed was 100 per cent post settlement – was massively diluted as a result.
“In other words, he is a thief,” the Sumatran businessperson told The Sydney Morning Herald, referring to Connell as a “crying crocodile”.
In the knotty legal case that has ensued, Connell said no criminal laws had been broken and the case, if any, should be tried under British law as it involves the sale of a British Virgin Islands company.
The Australian national also alleged that the Attorney-General’s Office cooked up the charges.
A report by the Indonesian Forum for Budget Transparency (Fitra) last week described the AGO as Indonesia’s most corrupt institution.
A handful of Connell’s expat friends, gathered at South Jakarta District Court for the second hearing on Monday, were quick to agree.
“The case is an orchestrated litany of lies and deceit; this is not a hearing of law, just one of vengeance,” said New Zealand national Greg Smith, also in the resources industry.
“Dennis has been set up good and proper,” he said.
Analysts familiar with the Indonesian business environment say caution is imperative for foreigners operating in the dynamic but sometimes uncertain market.
Anyone who fails to conduct thorough background checks on potential business partners is asking for trouble, risk analyst Keith Loveard, of Concord Consulting, said.
“Without wanting to comment on the details of this specific case, this is by no means the first time that an expatriate has been painted as a villain by Indonesian interests,” Loveard said.
Despite diplomatic overtures about boosting trade ties between the neighbouring countries, two recent cases have highlighted the uncertainty of investing in Indonesia’s mining sector.
In the past week the Brisbane-based firm Intrepid Mining appears to have been squeezed out of a lucrative gold and copper reserve in East Java by its local Indonesian partner PT IMN.
And, in May, British firm Churchill Mining filed for international arbitration after its permits were revoked by a local government official in Kalimantan and returned to the Nusantara Group, run by the wealthy businessperson and politician Prabowo Subianto. Seven witnesses will be called to Connell’s trial, which is expected to run until early September.