Understanding Corruption – Harvey Goldstein

In this elusive land of shadow puppets, nothing is quite what it seems. It’s easy for westerners to mistake the meaning or miss the nuance of what is said or done. Yes can mean no. Politeness can mask hostility. Devout Muslims turn out to be not so devout after all. The person ostensibly in charge may not be the one in charge at all. “It’s Indonesia.” said Barrick’s exploration manager Steve Bugg during a wide ranging conversation in the Texas BBQ Restaurant in Jakarta. “You see the characters move but you don’t really know who controls them.”

Indonesian values are very different from those of North America and Western Europe. Saving face and avoiding embarrassment are critical. As in the rest of Asia, relationships and trust count for more than money and have to be built up and nurtured – on the spot. not from afar – in offices, in homes, and on the golf course over many years. Business is conducted much differently than it is in the West. For outsiders to succeed takes a lot of patience and understanding, qualities that would be found wanting in some of the Canadian players in the Bre-X drama.”Team Canada” visits by a fly-in, shake-hands, fly-out chcerleading prime minister, with a planeload of businesspeople in his wake, do very little to bridge the chasm.

Not that corporate Canada is unfamiliar with Indonesia. Business ties have burgeoned, particularly in the past few years, with the result that there are more than 100 Canadian companies operating in the country. Most of them are in the oil and gas and mining exploration sectors. Participants include TransCanada Pipelines, Nova Corp., S’A'C-Lavalin Group Inc., Manulife, and Bata Shoes Canada Ltd. In February,1997, for example. Gulf Canada Resources Ltd. and Talisman Energy Inc. signed a $450-million (U.S.) financing deal for a natural gas project in Sumatra. Three months later, the Bank of Nova Scotia bought a small, profitable Indonesia bank. Scotiabank had left the country ten years earlier, in part because of its corruption.

The culture of Java, a small island with 115 million inhabitants with Jakarta at its heart, dominates Indonesia. The Javanese like developing relationships and trust over many years; they do not like to be rushed; they do not like decision-makers from afar determining their fate; they base their decisions on much more than money; and they favour progress through consensus, not through Conflict. A low- key approach can succeed where an aggressive one fails, as Barrick Gold would discover.

No one knows this better than Harvey Goldstein, chairman of consulting firm Harvest International Inc. and a consultant in Jakarta for twenty – seven years. Goldstein coaches multinationals such as Shell, Procter & Gamble, and Esso on the nuances of Indonesia’s business culture. How else would they know, for example, that putting your hands on your hips is as rude to Indonesians as putting your feet up on the table is to westerners?

“The threshold of being insulting or offensive is much lower to a Javanese person than it would be to a western person And the signals are much less perceptible to a western person.” says the portly, animated Goldstein. “During negotiations, the westerner can become oblivious to the transgressions, and if they think it’s only money and quality and time and delivery that are important, they’re wrong. It has something to do with attitudes and trust.

“President Suharto is the ultimate of Javanese gentlemen, because you go in and speak to him and you’ll never know when you pass the point of no return, unless you can read him very carefully. And that’s an art.

“There is a much more personal side to business in Indonesia which really says. Is that person or institution somebody that we can count on? Is he a person who is loyal and friendly to us, and is he a person or institution that we can trust?

“And if all those things are so, we can look at the financial side of the picture, or the quality side of the picture. But if that person or institution has had a disloyal or an offensive relationship, even though he comes with the best mousetrap at the best price in the best time delivery, he will fail:’

These attitudes are deeply embedded in Javanese culture and are not about to be changed by western companies who are used to getting their way, and getting it quickly. Goldstein explains that “when companies say, ‘They can’t do that to us, ‘I say, ‘Look. you have to understand this is their country and their game, and they’ve been colonized for so many hundred years. And they’ve fought their revolution, and they died for their freedom and they are going to do it this way. Now, do you want to play it? Maybe it’s not in your rule book.”

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