October 20, 1996|By NEW YORK TIMES NEWS SERVICE
LIPPO VILLAGE, Indonesia -- This flashy new community on the edge of the capital city of Jakarta, with its malls, golf courses and roller coaster, is a monument to the rags-to-riches story of one of Asia's most successful family conglomerates, the $12 billion banking, real estate and insurance empire controlled by Mochtar Riady and his sons.
Anchored by huge outlets for Wal-Mart and J.C. Penney, the Lippo Village has an elite English-language high school and basketball hoops at almost every home. It is a testament to the Riadys' fascination with the United States -- a country where they have suddenly found themselves at the center of a political uproar.
In the United States, Republicans are raising questions about nearly $1 million in Democratic Party contributions tied to the Riady family, suggesting that the donations influenced Washington's Indonesia policies. The Clinton administration denies that Indonesia or the Riadys' interests reaped any special benefits.
The rise of the Riadys in less than four decades is seen in a familiar context in Indonesia. Theirs is the story of Chinese immigrants made good, of a culture in which handshakes and favors traded over cups of tea combined with entrepreneurial vision to build financial empires.
Cultivated alliances
In assembling their array of interlocking real estate, insurance, financial and banking concerns, the Riady family cultivated alliances with other Asian business magnates, some of whom are also ethnic Chinese. Their flagship company, Lippo Group -- the name is taken from the Chinese words for "strength" and "treasure" -- is by some reckonings Indonesia's sixth-largest conglomerate; it employs more than 25,000 people across Asia in more than 100 companies.
The Riadys' plans for expanding their businesses in China give them a keen interest in the climate of relations between Washington and Beijing. Although the family has few holdings in the United States, it has been active in cultural and political exchanges and was among the founders of the United States-Indonesia Society, which has sponsored congressional visits to Indonesia.
"Lippo has long nurtured relations in a part of a world where relationships are virtually everything," said Frank G. Zarb, chairman of Alexander & Alexander Services, a U.S. insurance brokerage that has run joint ventures in China and Asia with the Lippo Group. "Their network includes the highest and most senior people in the Asia region."
The Riadys, according to several business executives with long experience in Indonesia, are successful in part because they are personally generous and attentive.
Misunderstood intent
"The whole concept of gift-giving in Asia is something that we Americans often misunderstand," said a U.S. businessman who has worked in the region for nearly 20 years and has had dealings with the family.
"Gift-giving is not seen as corruption or bribery," said the man, who spoke on condition of anonymity. "You are not trying specifically to get something today or tomorrow. But sometime in the future, perhaps, you are going to need to call on your friends for assistance, and one way to build friendship is by gift-giving."
The paths of the Asian conglomerate and the Democratic Party first crossed in the late 1970s in Arkansas, where one of Mochtar Riady's three Western-educated sons, James, took a job as a banker and met a rising star named Bill Clinton. James Riady was among the hundreds of business people with ties to Arkansas who contributed to Clinton's 1992 presidential campaign.
In this year's campaign, a former Lippo Group official who worked as a fund-raiser at the Democratic National Committee arranged for a South Korean company to make a $250,000 contribution to the party.
The gift violated the federal ban on foreign political contributions and was returned after the Los Angeles Times reported as much. On Friday, the Democratic National Committee suspended the fund-raising efforts of the former Lippo official, John Huang, saying it would ask federal election officials to investigate whether he had solicited any improper donations.
It remains unclear whether the Riady family got any special consideration from the Clinton administration. But one businessman with close ties to the Lippo Group, who insisted on anonymity, said the contributions seemed to be money well spent, if only because they raised Riady's standing among leaders at home, who might see him as a friend of the American president.
James Riady under fire
In Indonesia, James Riady, 39, has come under fire on two fronts: his fellow ethnic Chinese businessmen find him too brash and Americanized, and some countrymen question the patriotism of ethnic Chinese conglomerates that do much of their business abroad.
The accusations have put him in the odd position of representing to Americans a symbol of perceived Asian financial machinations while representing to his countrymen an uncomfortably Western outlook.
The Lippo Group traces its beginnings to the moment when Mochtar Riady, the son of immigrant Chinese parents, found work in a bicycle shop in Jakarta in 1959.
But as an ethnic Chinese in predominantly Muslim Indonesia, he belonged to a group long regarded with suspicion.
Although they make up less than 5 percent of the population, Chinese immigrants and their progeny control 60 percent of Indonesia's wealth. This is a tribute to their ingenuity in the face of unusual cultural oppression.
In the early 1970s, Mochtar Riady developed an alliance that would forever change his life. The dean of Chinese entrepreneurs, Liem Sioe Liong, took him on as a senior official with Bank Central Asia, which Riady helped expand into Indonesia's fifth-largest bank.
In 1982, the elder Riady joined forces with Ning, another wealthy Indonesian, to create what would later become Lippo Bank.
Pub Date: 10/20/96
