Swiss Tax Dispute Taints Indonesian Politics

(MENAFN- Swissinfo) Indonesian businessman Hashim Djojohadikusumo, a former resident of Geneva, has claimed in a Swiss court that he bankrupted himself by financing the Political campaigns of his brother, president-elect Prabowo Subianto. But was this financial support in line with electoral laws?

This content was published on May 19, 2024 - 10:15 5 minutes François Pilet, Gotham City*
  • Deutsch de Ein Schweizer Steuerstreit könnte Indonesiens Präsidenten blamieren Read more: Ein Schweizer Steuerstreit könnte Indonesiens Präsidenten blamieren
  • Français fr Un litige fiscal suisse pourrait embarrasser le président de l'Indonésie Original Read more: Un litige fiscal suisse pourrait embarrasser le président de l'Indonésie

In Indonesia, politics is primarily a family affair. Hashim knows a lot about that. The head of the powerful Arsari conglomerate, which is active in palm oil plantations, claims to have invested hundreds of millions of francs over ten years to finance the political campaigns of his daughter, Sara Djojohadikusumo, and, above all, those of his elder brother, Prabowo, a candidate for the presidency of Indonesia in the 2014, 2019 and 2024 elections. Prabowo was successful on his third attempt.

This funding is said to have taken its toll on his fortune, preventing him from repaying a tax debt of CHF131 million ($145 million) he left behind in Switzerland. At least, that is what his Swiss lawyers have explained repeatedly to the Geneva courtsExternal link and to the Federal CourtExternal link .

Hashim and his wife left Switzerland just after signing the sale of an oil company for $1.9 billion (CHF1.7 billion) in 2006. The Swiss tax authorities pursued legal action against the couple, who never paid what they owed. Subsequently, the couple appointed the lawyer and former Geneva politician Christian Lüscher to try to prevent Gotham City from revealing the affair, but without success.

Forced sales

On April 23, 2024, the Geneva debt enforcement office finally proceeded with the forced sale of their two villas in Anières. Estimated to be worth more than CHF17 million, the two properties were sold for CHF12.3 million. This does not even cover 10% of the couple's tax bill.

Prabowo, a former general and currently the defence minister, was elected president by a majority of Indonesia's 275 million people on March 24. He is set to be sworn in as president in October. The son-in-law of the former dictator, Suharto, he launched his 2018 campaign under the slogan“Make Indonesia Great Again”.

Prabowo Subianto, 72, at an election rally on February 14, 2024 in Jakarta, the Indonesian capital. Getty Images/2024 Getty Images

Appeals lodged by unsuccessful candidates against Prabowo's election were rejected by the Indonesian Constitutional Court on April 22. The losing candidates had complained of widespread fraud during the February elections, as well as nepotism on the part of Prabowo, who had appointed the eldest son of the outgoing president, Joko Widodo, as his running mate.

This victory was supposed to allow Hashim to turn the page. On April 23, the day his two villas were sold at auction in Geneva, he accompanied his brother – still defence minister pending his inauguration – on a state visit to Singapore.

Open question

However, one question remains unanswered. Did the incoming president mention the hundreds of millions allegedly advanced by his brother to finance his campaigns, as he is required to do by electoral laws? This information – although public – seems difficult to obtain.

Only a few Indonesian media outlets mentioned the auction of Hashim's villas in Geneva on April 11, citing an article in Le TempsExternal link . And as far as we know, the contents of Prabowo's declaration of campaign finances, normally available from the electoral commission, have not been revealed by any media to date.

The English-language newsletter Reformasi, a must-read for foreign investors in Indonesia, is the only media outlet to have looked into Hashim's tax woes in Switzerland.

Prabowo Subianto's election was validated by the Indonesian Electoral Commission on April 24, 2024. Keystone/Copyright 2024 The Associated Press. All rights reserved.

In an analysis published on April 19, ReformasiExternal link said any support from Hashim“would probably constitute a violation of the laws on the financing of election campaigns”.

“Hashim's Swiss tax imbroglio has received very little coverage in the national press,” the newsletter says,“even though the case provides a glimpse of a figure likely to influence policymaking in the future. Hashim has always exerted influence over his brother since the beginning of their respective careers, and it is likely that this will continue.”

“At first glance,” the newsletter continues,“the Geneva tax affair seems to reveal little more than administrative mismanagement and perhaps a degree of negligence. After the purchase of the two villas, the failure to comply with tax obligations over several years quickly led to a substantial debt, greater than the value of the villas themselves. At this stage, repudiation of the debt and outright abandonment of the villas, without dealing with the matter further, would at least have contained an element of logic.”

“But instead,” Reformasi concludes,“it seems that Hashim has persisted for years in fighting tax assessments in court and engaging in legal wrangling with a journalist, hiring lawyers for long periods. This aspect of the case, which denotes petty contempt, is perhaps the most important.”

Hashim is represented in Switzerland by Michel Cabaj, who defended him in the tax proceedings. The lawyer did not respond to our questions.

* Founded by investigative journalists Marie Maurisse and François Pilet, Gotham City is a legal intelligence newsletter specialising in white-collar crime.

Every week, it reports to its subscribers on cases of fraud, corruption and money laundering linked to the Swiss financial centre, based on publicly available court documents.

Several times a year, SWI swissinfo selects a Gotham CityExternal link article and makes it freely available to its readers.

Adapted from French by Catherine Hickley/ts

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