Indonesia house speaker denies Freeport extortion claim

The embattled speaker of Indonesia's House of Representatives denied Monday that he demanded a stake worth billions of dollars in a giant U.S.-owned gold and copper mine in exchange for allegedly helping it extend its operating contract.

House speaker Setya Novanto and a businessman ally are accused of falsely using the names of President Joko "Jokowi" Widodo and Vice President Jusuf Kalla to seek shares in PT Freeport Indonesia.

The two allegedly met in June with Freeport Indonesia chief executive Maroef Sjamsoeddin and asked for a 20 percent stake — 11 percent for Jokowi and the rest for Kalla — in return for an early extension of the company's operations in Indonesia.

Jokowi denied any involvement and expressed anger Monday at Novanto's alleged actions.

The case has dominated news in Indonesia for several weeks and is seen as one of the biggest political scandals in years. The country has taken a variety of steps toward democracy, but is still one of the most corrupt in Asia.

In an investigation, Parliament's Ethics Council questioned Sjamsoeddin and Energy and Mining Minister Sudirman Said in a hearing last Thursday broadcast on national television. However, on Monday it questioned Novanto behind closed doors, disappointing hundreds of journalists and spectators waiting outside the meeting room.

In comments from Monday's hearing circulated among journalists, Novanto denied the accusation and said a secret recording of the June conversation made by the Freeport executive was illegal because it was done without his permission. "This is an illegal recording, and I object to it being used as evidence," Novanto told the Ethics Council.

In his testimony last Thursday, Sjamsoeddin indicated that Novanto, from the opposition Golkar Party, had attempted to extort the company's shares.

Sjamsoeddin said he recorded the conversation because of suspicions about the subject of discussion and the presence of Muhammad Riza Chalid, an oil and gas businessman.

The 80-minute recording, played at the hearing, shocked many Indonesians. In it, Novanto and Chalid apparently attempt to convince the Freeport executive that they could ensure the company's contract would be extended from 2021 to 2041 because of their influence and Novanto's close connections with a Jokowi aide.

"I felt uncomfortable about the conversation because it was inappropriate," Sjamsoeddin told the Ethics Council. He said he decided to report the conversation to his superiors and the government.

Energy and Mineral Resources Minister Said reported Novanto to the Ethics Council last month and provided it with a transcript of the conversation.

Freeport has agreed to divest 30 percent of its Indonesian unit as part of its investment agreement with the government. It has asked for an extension of its current contract, which ends in 2021, before investing billions of dollars more at its Grasberg mine.

Security Minister Luhut Binsar Pandjaitan told reporters last week that the government would not speed up the extension of Freeport's contract because regulations say negotiations can only begin two years before the contract ends.

Grasberg, located in troubled Papua province, is one of the world's largest gold and copper mines. It has experienced frequent violent protests by workers, while activist groups have complained of alleged pollution and unfair distribution of profits.

It is run by Phoenix, Arizona-based Freeport-McMoRan Copper & Gold Inc. and produces around 220,000 tons of ore per day.