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Where Did Huffington's Fortune Come From?

California Senate candidate's wealth came from an Indonesian company - run by the oppressive army

MICHAEL Huffington is making national headlines by spending $25 million of his own money to win a seat in the Senate.

But is it really his money to spend?

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Looking at where it came from, we think not. We think it belongs to the people of Indonesia, and that it was taken from them at gunpoint by military dictators who teamed up first with Mr. Huffington's father, and then with Huffington himself.

This partnership in the natural gas business was a winner for both parties. Huffington got rich enough to overwhelm political opponents with television ads; the dictators were able to finance troops who repressed demands for human rights. The losers in this deal were 200 million Indonesians, who continue to suffer under brutal military rule - and American taxpayers who subsidized the deal through the World Bank.

The key to Huffington's wealth is Huffco, the production company his father, geologist Roy Huffington, formed with Texas investors after discovering natural gas in Indonesia in 1968. In 1971 Huffco formed a partnership with Pertamina, Indonesia's state-owned energy company. When Roy Huffington sold Huffco to a Taiwanese consortium in 1990 it was worth an estimated $650 million. Michael Huffington, who was vice president and vice chairman of Huffco from 1978 to 1990, took his $70 million cut and ran. He first ran for the House of Representatives, spending a record $5.4 million to win a seat in 1992. Now, in his Senate race, he's setting more records.

So what's the problem?

What's wrong with this? After all, most countries have a state-owned energy company, which forms partnerships with foreign firms and share profits from natural resources. But as we learned while conducting research for our recent report ``Financing Repression,'' the Indonesian Army controls large sectors of the economy, including Pertamina and the primary industries on East Timor. Indonesia invaded East Timor in 1975 and still occupies it in defiance of the United Nations. Top officers serve in the management of state-owned and even private businesses, and skim off money both for their private profit and to pay and arm troops. The troops are used to attack workers bargaining for pay raises, and to close newspapers that write about the military.

Pertamina was directly controlled by the Army from its establishment in 1968 until 1988, when a civilian head was appointed. Yet Pertamina's profits continue to be channelled to the Army through the payment of ``directors' fees'' to generals. A spokesman for Huffington told us that ``one can't say at any given time what kind of government there is'' in Indonesia. It is unlikely that Huffington didn't know how crucial Pertamina was to the armed forces and how important they were to keeping order so Pertamina and Huffco could operate.

Huffco administrators certainly knew something about the need to control dissent in Indonesia. The company illegally exported shock batons, billy clubs, and handcuffs to Indonesia in the 1980s, as reported by the Wall Street Journal and confirmed in Commerce Department documents. Huffco admitted the violation and paid a $250,000 fine. In his recent appearance on ``Larry King Live,'' Huffington claimed these items were exported to Huffco's own employees for their security, and not to the Indonesian armed forces or police.

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Principle, or profit

In fairness, the Huffingtons are not the only ones who have turned a blind eye to Indonesia's military. The World Bank has loaned Indonesia's dictators $13 billion over the past decade. The energy sector has more of these funds than any other, so Huffco and the Indonesian military were subsidized by taxpayers in the United States. The US continues to vote for World Bank loans to Indonesia at the rate of $1.6 billion a year, despite a recent law requiring that countries report their military budget and military holdings in the economy, which Indonesia does not. The administration continues to sell weapons to Indonesia, but it did recently turn down a proposed sale of F-5 warplanes on human rights grounds. Interestingly, Huffington's rival, Sen. Dianne Feinstein (D), has fought hard, but so far unsuccessfully, on behalf of a Torrence aircraft company to reverse that decision.

When Michael Huffington ran for Congress in 1992, he lambasted his rival in the primary, Robert Lagomarsino, for backing the sale of surveillance equipment to China's dictators after the Tiananmen Square massacre. How does Huffington square that principled stance with his own personal profiting from an alliance with Indonesia's dictatorship?

From our perspective, money taken from the Indonesian people, in a theft subsidized by the American people, is now being used to fund a Senate campaign that is ``a spiritual quest.'' We'd like to see Huffington's campaign coffers impounded as illegal plunder, and held in trust for Indonesia until it becomes a democracy.

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