LAPINDO DISASTER & COURT JUDGMENTS
By Soesetyo Soetadji
21 December 2007
The original paper entitled “Bencana Lapindo Brantas” was written in the Indonesian Language in October 2006, as a working paper submitted to satisfy the requirement of subject in “General Business Environment” at the Magister Manajemen Postgraduate Study of Gajah Mada University, under the direction of Dr. Aris Arif Mundayat. The paper was written a few months after the occurance of the Lapindo Disaster in East Java. Although the paper has now become a historical account of the disaster, the author believes that it will be needed for a reference to solve the problems in the future related to the disaster, which is still continuing until today.
It has been more than 1.5 years since the Lapindo hot mud disaster occurred. The surrounding populations not only suffer mentally and economically, from the alleged environmental crime perpetrated by PT. Lapindo Brantas, as a result from their oil & gas mining exploration, but they also suffer from the prolong incorrect steps by the government in solving the problem.
Thousands of hectares of rice fields and villages, as well as important super & infra structures have been destroyed, to render public life in the surrounding area destroyed. Hundreds of companies employing thousands of workers have to shut- down, leaving thousands of people unemployed.
In the case of the disaster, who should be responsible, how should the rule of law withheld, and how is the best way to compensate public losses, and how the Government, the Legislative and the Judiciary of this country should actually react.
2.1. How the Disaster occurred
On 28 May 2006, about 22.00 pm H2s gas leaked from near the drilling rig operated by PT. Lapindo Brantas near Sidoarjo, East Java. The leaking gas sprayed 10 meter high from a crevice on the ground. This gas then followed by hot mud flow from the hole in that crevice inundating the surrounding area.
With the hot mud spray, a vast lake of hot mud was formed, causing the surrounding area uninhabitable. Many factories had to be closed down, many hectares of rice fields and fish- ponds were destroyed. The local inhabitants had to be evacuated, because their houses were buried by the mud. Also the toll-highway connecting Surabaya and Malang had to be closed down for several weeks.
2.2. Cause of the Disaster
The following information was obtained from several reliable experts. The disaster was allegedly caused by the intentional negligence by PT. Lapindo Brantas, one of them was not using well-casings for the whole length of the well to save cost. In the case of a normal standard procedure when a well gas blow-out is occurring, the gas flowing up through the casings, could be stopped on the ground level using a special blow-out device, afterwards the well is closed using the drilling mud provided. In the case of Lapindo Brantas, there was no casing in the lower part of the well, and also the blow-out device was known to be out-of order at the beginning of the drilling operation. In the case of Lapindo Brantas the high pressure gas blow-up followed with the mud from the earth below could not be stopped because of the absence of the casing. The gas together with the mud flow up through a lot of porous passages in the ground eventually come-out through a particular hole, which became the main hole in the ground, not far from the location where the drilling rig is located. If the above reports could be proven in the court of justice, it is very clear that the mud-disaster could be regarded as a criminal negligence.
As commonly occurring, when a similar disaster develops, the involved parties are blaming each others. One of the shareholders of Lapindo, i.e. PT. Medco International Tbk, allegedly had warned PT. Lapindo in a letter dated 18 May 2006, to use the well casings in the whole depth of 8500 feet, as already agreed upon in the boring program. However it was not complied by Lapindo. With the absence of the casings, gas and mud had spread through crevasses along the bore hole, and then emit out to the surface, as described above.
2.3. Magnitude of Losses
As of 28 September 2006, more then 3000 families had to be evacuated, and 400 hectares of area had been flooded. Houses, and buildings destroyed by the Lapindo mud flood, were more than 1810 units, there were 18 schools, 2 offices, 20 factories and 15 places of worship destroyed. Among the 20 factories, 9 had to be totally closed down, and 600 employees lost their jobs
Many companies incur losses, due to loss of equipment, paying salaries to employees who could not work, sales are stopped, and loss of confidence by the buyers, due to inability of meeting orders. One company claimed to incur more than 30 billion rupiah. They were not sure whether or when they could be compensated.
The above illustration is only a small part of the losses which could be described, and it was 4 months after the accident. The losses so far after more than 1.5 years could probably be 100 times higher, because of the continuing mud flooding.
2.4. Preventing Spread of the Hot Mud
To control and prevent mud from spreading too rapidly to flooding the houses, dykes and ponds are built. During the 1.5 years the dykes and ponds have been built along a vast area and with ever increasing height. However this step cannot cope with the great quantity of mud emitting from the ground, requiring ever longer and higher dykes.
Beside building dykes and ponds, the hot mud should be directed to flow out. It could be through the Porong river or through the farming lands or through the villages, and eventually coming to the sea. Whichever way the hot mud will flow, will attract objections and opposition by the surrounding population, because it will cause environmental destruction.
2.5. Corporate Crime
According to WALHI (Environmental Protection Organization) of East Java, referring to Law No.23/1997 about Environment protection, and also referring to similar existing regulations, what is committed by PT. Lapindo Brantas can already be regarded as a “Corporate Crime”. According to several law textbooks, a corporate crime is a “White Collar Crime”, namely a conduct by a corporation, or its employee/s acting on behalf of the corporation, who break the law and therefore can be prosecuted.
In this particular corporate crime, the highest responsibility lies on the CEO, Directors, and Supervisors (Komisaris) of the PT. Lapindo Brantas Corporation. Also the employees who committed negligence, or committing deviation on operating procedures could be blamed and to be prosecuted.
According to DR. Suparto Wijoyo a Law expert from The Airlangga University, PT. Lapindo Brantas and its Holding Company i.e. PT. Energi Mega Persada have broken the following: Environmental Law, Highway Traffic Law, Oil and Gas Law, Mining Law, Public Health Law etc, and its CEO ought actually be caught and kept in Police detention.
2.6. Mud Volcano
With the occurrence of the continuing mud emitting from the earth that is very difficult to stop, some experts in geology conclude that this occurrence may be a phenomena of “mud volcano”. If this is true, there is no known technology that can stop the mud flow. One of the experts in Geology (Mr. Andang Bachtiar) says that the existence of hidden mud volcano actually had no connection with the Banjar Panji-1 well (location of boring). However the formation of the particular mud volcano near Porong was triggered by error committed by PT. Lapindo Brantas in connection with the well drilling operation.
2.7. Estimation of Mud Flow Radius.
If it is assumed that the mud disaster is truly formation of “Mud Volcano”, estimate of the radius how far the mud would flow out from the source could be calculated. From the information that the average flow of mud is 126,000 cubic meter per day, and within 4 months the heights of the dykes have reached 10 to 13 meters, it could be assumed that the average rise in mud level is also 10 meters,
The accumulation of mud would form a circular cone if there is no restriction of its flow, such as dykes etc. The ground below the mud cone will also sag. We could calculate the radius of the mud flow using the “Right Circular Cone” formula; as follows:
Right Circular Cone
Solving for volume:
Volume of cone =1/3 x3.14 x r² x h
Volume of cone in one year = 126.000x365=45.990.000 cubic meters
Height of cone (including sagging below ground) in one year 3x10=30 meters,
45.990.000 = 1/3 x 3,14 x r² x 30,
r²= (45.990.000 x 3) : (3,14 x 30) = 137.970.000 : 94,2= 1.464.650
Therefore r= 1210 meter
Approximate Radius of mud flow from the source in one year=
III. Conclusion & Suggestion
From the above analysis, one can conclude the following:
- Loss to the surrounding inhabitants and to the environment is very apparent. Compensation in any form is clearly necessary.
- This occurrence bears elements of breaking the Law, and Corporate Crime.
- Flow of mud may probably go on indefinitely and cannot be stopped.
From the above conclusion we suggest:
- Losses to the inhabitants, to industries, and to the environment need to be calculated as accurate as possible. and the whole losses should be claimed to PT. Lapindo Brantas together with its Holding Company, and their shareholders for compensation. If the amount of losses is so great that PT. Lapindo Brantas and its Holding Company and their shareholders could not compensate the whole amount, the government should impose that they (Company, Holding Company, and shareholders) should sacrifice all their possessions, until such that they literally should be around only wearing their underwears, and only carry their essential possessions. Then the remaining compensation would be borne by the government. The government has that responsibility, because it gave the permit to establish the Lapindo Brantas Company and also gave permit to the drilling operation.
- Since there are elements of breaking the Law and Corporate crime, the Directors, Commissioners, CEO, President and the involved employees according to the organizational structure should be tried and prosecuted. Likewise, the involved government office who gave the operation permit should also be brought to trial and prosecuted. Although probably one of the shareholders is a member of the presidential cabinet, we should not discriminate. The Law should be withheld as such.
- The existing law and regulations on Environmental Preservation (AMDAL) should be fully implemented, and Permit and Supervision on Mining operations should be given more strictly, such that reoccurrence of similar disasters that generate suffering to the community will not happen.
- With the prospect that the mud flow cannot be stopped, the local and central government must make a long term planning for the relocation of the surrounding inhabitants (where, gradually, how far away?). As well as relocations of public facilities and infra-structures, relocations of towns and villages, must be projected from now on, assuming the worse situation, that the mud flow will be 1.2 km per year, from the original source.
IV. Developing Events and Court Judgment up to Dec. 2007
- Although preventive measures have been tried, e.g. inject concrete balls to plug the mud hole, making ponds, making retaining wall, pumping the mud to the nearby river or to the sea, they do not help anything in stopping the mud flow. Assuming that the mud flow cannot be stopped, all those efforts would be useless, probably only changing temporarily the shape of the area inundated by the mud. But the increase of radius by 1.2 km per year will continue.
- Through a Presidential Decree, compensation to victim of Lapindo should be given out in 2 terms i.e 1st 20% and thereafter 2nd 80%. According to Lapindo, out of the total approx. Rp.3.1 trillion to be paid, Rp. 622.3 billion. has been paid. But, in reality not all victims who are entitled to get the 1st 20% have received it.
- The family of Aburizal Bakrie, is the biggest shareholder of Lapindo. Aburizal Bakri is currently member of the Presidential Cabinet, and recently declared by Forbes Asia magazine as the richest person in Indonesia with total assets of more than Rp.52 trillion. On complaints by the victims of Lapindo of being slow in paying compensation, and showing signs of trying to avoid responsibility, Jusuf Kalla, the Vice President of Indonesia commented recently that we should not worry, because he believed that Aburizal Bakrie would for sure pay all the compensation very soon. A parliamentary team has required that within 2 years from April 2006, all compensations shall have been paid.
- Hendarman Supandji, the Indonesian Attorney General recently stated that according to the Corporation Law No.40 / 2007, corporations whose business is in exploitation of natural resources, are obligated in carrying out social and environmental responsibilities. In cases of environmental damage, he gave the example of Lapindo as a case which has a very great impact. He also reiterated that a criminal act by a business entity or corporation, is indeed causing greater impact than crime committed by individuals. According to the above mentioned law, responsibility for a criminal act committed by a corporation, must be borne directly by the corporation.
- In January 2007, YLBHI (Indonesian Legal Assistance Foundation) sued PT. Lapindo Brantas for the alleged criminal act to the Central Jakarta Court on behalf of the victims. Through court proceedings which lasted painstakingly until 27 November 2007, finally a verdict was made by the court, absolving PT. Lapindo Brantas of all allegations of committing any crime. The reasoning given by the court was that Lapindo and the Government have been carrying out their responsibilities optimally in giving compensation to the victims, by paying most of the 1st installment of 20% and providing shelters, and living facilities to the evacuees. Apparently the judges did not give consideration to all evidence put on the table by the witnesses on the great physical and mental humanitarian sufferings by the victims. The Judges apparently reduced the case as though it was just a material transaction, without regard to the human sufferings of the victims and therefore giving unfair judgment.
- Evaluating the judgment of the Central Jakarta Court, of course most people in Indonesia who know the problem, are not satisfied. Such judgment is regarded as grossly unreasonable, a lot of families lost their dwellings, and their jobs, the farmers lost their farms, education and health care are disrupted, social relations and culture are destroyed. Tens of thousands people lost their future, and their basic constitutional rights are disregarded. The amount of compensation so far extended was judged to be sufficient by the Judges, while most of us feel it is far from adequate. Apparently the Judges did not see any element of crime committed by PT. Lapindo Brantas.
- A law suit was also lodged by WALHI (Non governmental organization for environmental protection) to the South Jakarta Court, the defendants were PT. Lapindo Brantas, its shareholders; Energi Mega Persada, Kalila Energy, Panasia Enterprises, Medco Energy, Santos Brantas Energy. Besides that, Indonesian President, Minister of Energy and Mineral Resources, Directorate General for Supervision of downstream Oil & Gas operation, State Minister of Environment Protection, East Java Governor, and Regent of Sidoarjo. On 27 December 2007, final verdict was made, concluding that the mud flow disaster at Ronokenongo village, Porong region, Sidoarjo regency was caused by Natural Phenomena, and had no connection with the drilling operation by PT. Lapindo Brantas. Therefore nothing against the law was committed.
- After the court proceeding the attorney representing WALHI said that “Fairness is Dead”.
- The attorney representing YLBHI is making appeal to the High Court, so we can only wait what will be the next judgment by the High Court.
- Tempo Interaktif
- Koran Kompas Sept,Okt, 2006
- JakartaPost Sept,2006
- AFP, Channel News Asia
- Walhi Jatim
- Yosef Ardi di Situs Internet
- Stock Watch di Situs internet
- Koran Kompas, 28 November 2007
- Koran Kompas, 3 December 2007
- Liputan6.com, Sidoarjo, 14 December 2007
- Koran Kompas, 28 December 2007