Leonard van Hien writes…

The autobiographical parts of what follows may not be of interest to many members, but for those who don’t know my background I believe that to leave those parts out somehow leaves readers wondering what authority I have to be making the observations that are in the rest of the article. 



When I first came to Indonesia for the historic Fourth Subud World Congress at Wisma Subud I was twenty one years old. I had qualified as a chartered accountant in the City of London and, having started work aged seventeen in a medium sized firm of accountants, I already had under my belt four years experience as an audit clerk.

Although this clerical work appeared mundane, it brought me into first hand contact with people who ran a large variety of businesses. I was at liberty to ask lots of questions and to try to understand how these businesses worked and sometimes why they failed.

I was on the audit teams of, inter alia, a brick manufacturer in Sussex, a textile manufacturer in Glasgow, a citrus fruit importer on the Liverpool docks, restaurants in Piccadilly, a prime city-centre real estate developer, a hotel management business, a merchant bank in the City of London and a business syndicating television programs world wide, whose office premises in London West End’s fashionable Sloane Street, turned out to be a front for gun running by the founder of Britain’s SAS.

In the early nineteen seventies I sat on Subud Britain’s National Committee as its Treasurer and oversaw the affairs of  The Subud Human Welfare Trust. Four years later, in 1975, I was asked to take unpaid leave from my office in London to come to Jakartafor a few weeks to help improve internal control systems at PT S Widjojo, where the S Widjojo Center was under construction.

At the 1979 Toronto Subud World Congress, I was appointed to a consultative committee for Bank Susila Bakti. Based in Singapore, I flew into Jakarta at weekends, sometimes as often as fifty times a year, usually staying as house guest with Wayne Lerrigo, Sharif Horthy and Rashad Pollard.

Five years later, in 1984, I was asked to join a team led by Lienhard Berger to review Project Sunrise, which was at that time involved with devising plans for the redevelopment of Darling Harbour in Sydney. I then spent six months in a cabin on the construction site at Anugraha looking after the one million dollars that Adam Albright generously provided to ensure that all building contractors were paid off.

Later, after spending three years inHong Kong, I sat as a shareholder representative for PT S Widjojo. Lienhard’s team handed over a clean company at the end of 1996, only to see the company run into problems created by its new board.

I founded a company called Kalimantan Investment Corporation (“KIC”) in order to acquire, for only one dollar, an Indonesian mining contract of work that an Australian company called Molopo wished to sell. This provided a formal corporate investment structure for those Subud members whose money, which had originally been sent for plots of land at Tengkiling, had, without their consent, been diverted to the mineral exploration project.

Others in a tight circle who wished to risk new money in the exploration could also invest in KIC ordinary shares. This was the fore-runner for the present company Kalimantan Gold Corporation (“KGC”) which is publicly listed on both the Toronto and London Stock Exchanges. Neither KIC nor KGC has ever had debt on the books.

I have also sat on the management board of the Indonesian foundation Yayasan Muhammad Subuh and on the board of trustees of its US registered counterpart, the Muhammad Subuh Foundation. Following Bapak Subuh’s passing, his heirs found themselves as owners of a small company called PT Pancaran Cahaya Bahagia (“PT PCB”) established by Bapak Subuh, a few years before he died, in order to pioneer Subud’s involvement withKalimantan.

The company had the rights to over 600  hectares of land at Tengkiling promised by the then Governor of Central Kalimantan to Bapak Subuh. It also held a significant number of shares in the mineral exploration endeavor. Bapak’s heirs duly donated all of their shares in PT PCB to Yayasan Muhammad Subuh. I have the impression that most Subud members are unaware of what Bapak’s family gratuitously handed over to Subud’s institutional interests.

Having spent eighteen years as a partner in an international accountancy firm in Singapore, Hong Kong and Indonesia and a further ten years as country chairman for a public listed company with over 130,000 employees in Indonesia engaged in everything from auto assembly to palm oil plantations, consumer finance, supermarkets, luxury hotels, coal mining, banking and heavy equipment, I have a reasonable grasp of how global businesses operate in Asia – and Indonesia in particular.

I have sat on the boards of the British Chamber of Commerce and the European Business Chamber of Commerce and have been invited more than once to the Palace to act as a spokesman in order to brief the President of the Republic on the concerns of foreign investors ahead of his attendance at G20 meetings.

I have also brought a twelve man multi-disciplinary group to meet with the present Governor of Central Kalimantan to discuss the establishment of a Regional Development Authority coordinating the plans of all four provinces in Kalimantan. At the Governor’s request, the meeting was held at the Muhammad Subuh Centre at Rungan Sari.

This was a milestone of sorts. Years earlier, when there was nothing to see but sand and bushes, I had attended the laying of a foundation stone by Ibu Siti Rahayu at the site of the Latihan Hall at Rungan Sari. The place has come on a long way since then.

To date over twenty five million dollars has been invested by Kalimantan Gold Corporation in the mineral exploration endeavor. It remains to this day a speculative venture on an ever shorter time fuse with only one year to run in its exploration phase before it will be required, under the terms of its contract of work, to move to a feasibility phase. The “one year” clock starts running as soon as a long awaited permit has been received from the Department of Forestry.

Separately, thanks to the initiative of two Subud members, over one million dollars has been privately invested in putting in basic infrastructure and a small hotel at Rungan Sari complete with a swimming pool, tennis court and meeting facilities. The Subud community there, so far as I can see, remains a faith-based community.

The houses are of good quality and the development is clean and well managed. Apart from the residential properties, the hotel and a well-regarded, Subud-run school with ninety pupils, there is little else of significance to talk about.

Unlike the situation several years ago when it was hard to access credit in Indonesia, banks and other financial services companies now compete strongly with each other to provide loans and other forms of credit all across the archipelago. Any well run business, especially one serving a mining joint venture in which a reputable mining major has invested, should have no difficulty accessing working capital loans.

Any business that is unable to access credit in today’s Indonesia is, almost by definition, a high risk credit. It is important for Subud members anywhere in the world to understand this, especially if they are in due course approached to invest in a Subud-run financial services company such as the one which the World Subud Council has recently encouraged to be established.

Any such financial services company should, in my opinion, be owned and run only by a small circle of experienced people who are willing to risk their own capital. It should not be owned by hundreds of small unsophisticated investors.

The standards of governance in Subud have, for several years now, fallen well short of where they should be. For example, the World Subud Association and the Muhammad Subuh Foundation have for many years failed to present their audited financials within the time limits specified in their respective constitutions. Accountability of organizations is a key component of democracy. Without competence, integrity is overvalued.

Apart from the aspect of governance, I am not convinced that there is currently sufficient experience in the World Subud Council to act as an effective brake on the enthusiasms of the WSA Executive. This makes it necessary for Subud members not directly involved with the World Subud Council to remain vigilant and to do whatever is required to protect Subud members everywhere from investing in any venture just because it appears to coincide with the general wish to become involved withKalimantan.

My own view is that for the time being investment into Kalimantan remains high risk and, as such, it is not something that hundreds of small unsophisticated investors should be encouraged to invest in. Instead, a courageous few with deep pockets who are so inclined can take up the challenge.

Over the course of many decades businesses can develop and reinvent themselves. For example, one day Kalimantan Gold Corporation might, with an expanded board of directors, be restructured and extend its remit beyond the present dedicated focus on mineral exploration.

That would enable KGC to become a vehicle for future investment in Kalimantan on a broader plane. As a public listed company, KGC is required to comply with the regulations of two reputable stock exchanges. Therefore, one expects that the standards of governance would be better than what was experienced in the last few years at PT S Widjojo.

Even so, KGC’s reports should be read carefully. Using the mainstream Subud media, KGC has consistently emphasized its commitment to community work. However, from a careful scrutiny of the company’s latest interim statements, it is clear that more has been expended in the six months to 30 June 2011 on executive stock options than has been spent on community development in the entire history of the project.

No doubt this is an inconvenient truth. Disproportionate remuneration is one of the issues that have to be watched, especially in a community such as the one we have in Subud, where so much of the early foot work is done on a voluntary unpaid basis.

There are many reasons why large scale Subud enterprises have failed. To me the one that stands out as being the most obvious is that they were brought down by an inability to manage debt obligations. In some cases this was because the businesses were under-capitalized and consequently relied too much on bank loans, which in the end could not be repaid.

In other cases, the terms of loans provided by one or two Subud members were unfairly biased against shareholders in favor of the lenders. In effect the lenders had positioned themselves for personal advantage at the expense of the bulk of the other investors.

My sense is that for many years to come Subud investment into Kalimantan will, for the most part, have to be mainly in the form of shares. Otherwise our endeavors will continue to be at the mercy of lenders.

LvH: Pamulang, Indonesia 5th September 2011