Indonesia Military Says No "Direct" Payments From U.S. Miner

JAKARTA (AFP)--Indonesia's military denied Tuesday a disclosure by U.S. mining giant Freeport-McMoRan Copper & Gold Inc. (FCX) that the company pays for soldiers to guard a massive gold and copper mine in the Papua region.

The denial came after Freeport told shareholders it had paid support costs for the military guarding the Grasberg mine in the remote eastern province, where soldiers are regularly accused of human rights abuses.

The payments have continued despite efforts by the Indonesian government to stop the military from acting as paid protection for private interests. The company says it is doing nothing illegal.

Military spokesman Sagom Tamboen said while an unspecified number of soldiers indirectly received allowances from Freeport for providing security at the mine, they were there "on the request of police."

Freeport's allowance payments "cannot be said to be given to the TNI (Indonesian military)," Tamboen said.

"Actually it is given to the police and the police give it to the TNI because the TNI are assisting the police."

He added: "My explanation is that the laws and regulations in Indonesia do not allow the military to be a security force at vital national assets anymore. That duty has been diverted to the national police."

However, a spokesman for Arizona-based Freeport has said the company paid less than $1.6 million to the police and military last year to provide a "monthly allowance" for personnel at and around Grasberg.

That is part of $8 million Freeport paid in broader "support costs" for 1,850 police and soldiers protecting the site last year, according to a company report filed with the U.S. Securities and Exchange Commission.

Tamboen said he was seeking clarification from Freeport on the nature of its payments.

Indonesian soldiers have been accused of rights abuses as they seek to snuff out support for a low-level separatist insurgency in the resource-rich but impoverished region.

A 2007 ministerial decree, the latest of a number of legal measures, set a six-month deadline for the military to give up responsibility for security at "vital national assets," of which Graberg is one, to the police.