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Pertamina the ATM machine for Suharto family

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Pertamina the ATM machine for Suharto family

Friday, 25 July 2008

Just because oil governs our lives ... can make or break companies ... and has made the current administration look like fools for leading us on an energy-independence quest that has made us more reliant than ever on other countries, oil is completely overrated.
So what if the world runs on oil. So what if oil barons are richer than ethanol barons.
So what if oil can lead the entire world into a global recession. And, with falling prices (like the past week!), seemingly pull us out of one.

I repeat: oil is no big deal.

As a fuel, it’s on the way out. Okay, not tomorrow or next year. But historians will mark these next 20 years as the last heyday of this dirty overpriced greasy fuel.

As an investment it’s too unreliable. One day oil’s up. The next it’s down.

It can go up on news of a hurricane plowing through the Gulf – even if it does no damage. It can go down even on those days (like yesterday) when Iran announced (again!) to the world that it would not be deterred from developing its nuclear program. (Is anybody listening out there?)

As a strategic resource critical to a nation’s security? As a valuable resource that nourishes a country’s economic growth? Don’t make me laugh. Countries are better off without it. Until recently, we made oil an ally not an enemy of economic growth. We were the exceptions. Oil isn’t a blessing. It’s a curse.

For every U.S., there is a Nigeria. A wealthy country 20 years ago, Nigeria was done in by oil’s corrupt influences.

Yes, oil creates the possibility of untold wealth for individuals and companies. But without the rule of law or some kind of checks and balances on the ruling elite, oil morphs from black gold into the black plague.

Indonesia’s once plentiful oil has set their economic development back 15 years...

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Russia’s oil revenue hasn’t ruined the country, but it will. Russia is this century’s version of a “Banana Republic.” Do you love Russia’s economy? Russia extracts. It sells. And it invests its profits elsewhere. What kind of economy is that?

Venezuela’s oil is financing their socialist and populist experiments – none of which involve creating a private sector that can create wealth.

On the other hand...

Japan never had oil and it grew into Asia’s first economic giant. Singapore never had oil and it’s the pearl of Southeast Asia.

I’ve seen the corruptive influence of oil up close – while doing business in the ex-OPEC member country of Indonesia. Brazil has Petrobras. Mexico has Pemex. Indonesia has Pertamina – for a long and ignoble time the most dishonest, conniving, corrupt, inefficient nepotistic agency in the country.

If you knew Indonesia like I know Indonesia, you’d know that’s saying something. (Is this where I say that some of my best friends in Indonesia are Pertamina executives? They are!)

Hey, hate the organization but love the workers. I’ve met a least two of Pertamina’s executive directors. Maybe three – I’ve lost track – all in the course of doing business (or trying to) with them.

It was an open secret that Pertamina was the personal ATM machine for the ruling Suharto family. Before Suharto was forced from office, he and his children and some close relatives stole billions from government coffers. And the easiest way for them to get their hands on government revenue was through the obliging bureaucrats of Pertamina (my Pertamina friends excluded).

Pertamina handed out contracts only to the well-connected and generous-of-heart (gift-giving was truly appreciated). It’s a miracle that the construction and environmental company I ran won any contracts. And – as unbelievable as it sounds – we did it without parking one Mercedes in a Pertamina executive’s garage (wrapped and tied with a bow on top).

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