Indonesia house leader resigns over Freeport extortion claim

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JAKARTA, Indonesia (AP) — The embattled speaker of Indonesia's House of Representatives resigned Wednesday over his involvement in one of the biggest political scandals in years, in which he allegedly sought kickbacks from a giant U.S.-owned gold and copper mine in exchange for helping it extend its operating contract.

Setya Novanto from the opposition Golkar Party has been at the center of the scandal, which began with a meeting in June with Maroef Sjamsoeddin, chief executive of PT Freeport Indonesia, at which he and a businessman allegedly used the names of President Joko "Jokowi" Widodo and Vice President Jusuf Kalla to seek stakes in the mining company.

"In order to secure the dignity and honor of the House of the Representatives and to create public order, I have decided to resign from the position of house speaker," Novanto said in a letter to Parliament's Ethics Council.

The resignation came just minutes before the 17-member council was to reach a conclusion on his conduct. Statements from council members indicated that it would rule that Novanto was guilty of a "moderate ethics violation," which would result in his dismissal.

A recording of the conversation made by Sjamsoeddin showed that Novanto and Muhammad Riza Chalid, an oil and gas businessman, 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.

Both Jokowi and Kalla denied any involvement and expressed anger at Novanto's action.

"It was a good decision even though it was a little bit late," Kalla said of Novanto's resignation. "It should have been announced last week."

In its investigation, the Ethics Council questioned Novanto, Sjamsoeddin, Energy and Mining Minister Sudirman Said, who reported the scandal to the council last month, and security minister Luhut Binsar Pandjaitan, whose name was mentioned 66 times in the June meeting.

Novanto denied the accusations and argued that the recording of the June conversation was illegal because it was done secretly without his permission.

The 80-minute recording 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.

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

Under Indonesian law, the extension of the contract cannot be negotiated until two years before the contact expires in 2021.

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.

The Attorney General's Office is also investigating the case.

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