On the day a former Monsanto exec - Charles Martin - was fined $30000 for bribery while promoting Monsanto's wares in Indonesia, here's an excellent Wall Street Journal article describing Monsanto's bungled attempt to bribe Indonesia's government into accepting GM.

NB Charles Martin, the Monsanto man at the centre of the bribe's, now heads the U.S. Chamber of Commerce in China, of which Monsanto is a member.

Note also the following statement by Martin, quoted by the WSJ and revealed to investigators by an Indonesian official:

"When the government plays classical music, we play classical music; when it plays jazz, we play jazz; if it plays bribery, we play bribery; but if it plays clean, that is what we like."

Monsanto doled out a total of $700,000 plus in bribes to at least 140 Indonesian officials or their families, for which it has already had to pay $1.5 million in penalties. And when the bribes scandal got underway current Monsanto Chairman Hugh Grant was in charge of Monsanto's Asia Pacific division.
http://www.gmwatch.org/p1temp.asp?pid=58&page=1

If as he claims - with a shake of the head (see below) - he didn't know about the systematic bribery in Indonesia, then he wasn't doing his job.

---

Seed Money
In Indonesia, Tangle of Bribes Creates Trouble for Monsanto
Lobbying Effort for Permits Included $50,000 in Cash; The SEC Brings Charges
By PETER FRITSCH and TIMOTHY MAPES
Staff Reporters of THE WALL STREET JOURNAL http://www.happinessonline.org/InfectiousGreed/p40.htm

Wall Street Journal, April 5 2005
PAGE ONE

JAKARTA, Indonesia -- In early January, U.S. government prosecutors nabbed a big company in an unusual corruption case. Agricultural and biotechnology giant Monsanto Co. agreed to pay $1.5 million to settle charges of bribing Indonesian government officials. In seeking permission to sell genetically modified seed, Monsanto made $750,000 in payoffs to officials during a six-year period, according to a January complaint filed by the U.S. Securities and Exchange Commission.

The filing cited gifts including golf memberships, luxury travel and money to buy land. The links to specific Monsanto executives in many of these cases remain unclear. But investigators focused on one payment that paints a vivid picture of Monsanto's efforts to sway policy: a $50,000 cash gift to Indonesia's Environment Minister.

The SEC complaint refers to those involved only in general terms. According to several people close to the matter, one is a former Monsanto executive and seasoned U.S. diplomat who now heads the American Chamber of Commerce in Beijing. Working on his behalf was an ambitious young American lobbyist with a secret past who became famous when he left his pregnant wife for an Indonesian movie star. The lobbyist worked for a Jakarta-based company founded by Harvey Goldstein, the son of a Brooklyn, N.Y., cop. People who know him say he took the name Mohammed Harvey Goldstein as part of his marriage to a Muslim woman.

The story behind the $50,000 bribe sheds light on the tangled world of Indonesian business and politics. Indonesia has long been known for its venality, a problem compounded by the 1998 fall of President Suharto and the unstable political environment that followed. Authorities there are now making a public show of repairing the nation's reputation and see Monsanto as a test of their resolve. Local investigators have asked the SEC to share its evidence, something the agency has not done, citing the confidentiality of its investigation and the lack of a treaty covering the sharing of information between the two countries.

For Monsanto, based in St. Louis, the case is a black eye. Although prosecutors don't allege that Monsanto's top executives knew about the bribes, they do contend the corruption continued unabated because of the company's lax oversight.

At the time of the settlement, Monsanto's General Counsel Charles W. Burson said in a written statement that the company "accepts full responsibility for these improper activities, and we sincerely regret that people working on behalf of Monsanto engaged in such behavior." He added that the company has "terminated" the employees involved as well as its relationship with the lobbying firm.

In an interview, Monsanto Chief Executive Hugh Grant shook his head when asked if he had any involvement with the Indonesian lobbying firm. He says Monsanto uncovered evidence of the wrongdoing and brought it to the attention of U.S. authorities. "We solved the puzzle...but it should never have happened," he says. "It's not who we are."

At the center of the story is Michael A. Villarreal, who grew up shuttling between U.S. military postings and divorced parents. In 1989 he ran afoul of the law when he was arrested in Panama City, Fla., and charged with armed robbery. He was sentenced to probation and community service tutoring kids at Camp David Gonzalez, a detention center in Calabasas, Calif. "I got a second chance," he says.

Because Mr. Villarreal was a juvenile at the time, his record was expunged from the public record and his plan to enter Pepperdine University went ahead as scheduled. He earned a degree in political science in 1994 and married his college sweetheart the same year.

The newlyweds decided to seek their fortune in Indonesia, the exotic and then-booming Southeast Asian nation where Mr. Villarreal's wife had grown up. Mr. Villarreal, who is now 33 years old, quickly became fluent in Indonesian and rubbed shoulders with ministers and movie stars after he found work as a lobbyist.

At the time, Monsanto was trying to win approval from the Indonesian government to sell genetically modified seeds. Monsanto wanted to move away from slower-growth businesses, such as selling chemicals and fertilizers. It ultimately wanted to sell corn seeds in Indonesia but decided to start with cotton, a less controversial product because it isn't eaten.

The collapse of President Suharto's regime, which tipped the country into anarchy, set back Monsanto's lobbying efforts. Dissatisfied with progress made by its local consultant, Monsanto turned to a local firm, PT Harvest International Indonesia. Harvest was founded in 1990 by Mr. Goldstein, 65, who has advised foreign companies doing businesses in Indonesia for decades.

A well-connected lobbyist, Mr. Goldstein is also Gambia's consul to Indonesia. The red, blue and green flag of Gambia, a country of 1.4 million people on the west coast of Africa, hangs outside the entrance to Mr. Goldstein's Jakarta office.

It's not clear how or why Mr. Goldstein was appointed to that position, but it gives him privileged access to official government and diplomatic functions. He was one of the few foreign businessmen able to arrange meetings for clients with President Suharto.

Mr. Goldstein converted to Islam in order to marry a Muslim woman from Malaysia and took the name Mohammed Harvey Goldstein, say people who know him. The couple later divorced and Mr. Goldstein has remarried.

Shortly after Monsanto hired Harvest in 1998, the account was handed to Mr. Villarreal, who had joined the lobbying firm a few years earlier. Bungaran Saragih, a former Indonesian agriculture minister, says he was lobbied repeatedly by Mr. Villarreal and Charles M. Martin, who was then Monsanto's chief public- and government-affairs officer in Asia.

Mr. Saragih says Mr. Martin paid him a courtesy call before leaving Monsanto in late 2002. During that meeting Mr. Martin reflected on his time in Indonesia, according to the minister, saying: "When the government plays classical music, we play classical music; when it plays jazz, we play jazz; if it plays bribery, we play bribery; but if it plays clean, that is what we like."

Mr. Martin, 60, the current head of the American Chamber of Commerce in Beijing, didn't respond to repeated attempts to seek comment.

In early 2001, Monsanto had a small breakthrough. The Agriculture Ministry gave farmers on the island of Sulawesi permission to grow Monsanto's cotton.

But only a few weeks later, the Environment Ministry reversed course. It issued a fresh decree saying Monsanto had to first subject its cotton to environmental assessment tests that would measure its impact on the local flora.

In August 2001, Nabiel Makarim was tapped as environment minister after a new government came to power. Monsanto applied a full-court press to persuade the government to nullify the decree, according to Mr. Villarreal and several Indonesian officials. As part of the effort, Mr. Villarreal accompanied Mr. Makarim on a December VIP visit to Monsanto's headquarters. Mr. Makarim didn't reverse the decision.

It was at this point, according to the SEC's complaint and people familiar with the matter, that Mr. Martin, the Monsanto public- and government-affairs officer, intervened. Before joining Monsanto, he had spent much of his career with the U.S. State Department in Asia, with postings in Beijing, Hong Kong and Manila. Now, he told Mr. Villarreal to pay the minister $50,000, people familiar with the matter say.

Even before the cash changed hands, Mr. Martin made attempts to cover Monsanto's tracks, according to people familiar with the matter. These people say he instructed Mr. Villarreal to disguise the $50,000 as consulting fees billed by Harvest. The actual invoices totaled $66,000 in order to include some unspecified taxes relating to the supposed billing, according to the SEC complaint.

The SEC complaint details the "false invoices" but doesn't name Mr. Martin specifically. It instead refers to a "Senior Monsanto Manager."

Just before Christmas 2001, Mr. Martin sent an e-mail from his Monsanto account to Mr. Villarreal's private e-mail requesting an invoice for $66,000 and instructing that it relate to trips made to the U.S. "In this case, it can say arrangements for the visit and Harvest staff accompanying on the visits," Mr. Martin wrote, according to the e-mail, which The Wall Street Journal has viewed. "Specify how many man-hours were spent and what rate. This should all be on the invoice," the e-mail continues.

According to the SEC complaint, the invoices were submitted to Monsanto before one of the trips being expensed had even been made.

In early February 2002, on instruction from Mr. Martin and with the knowledge of Mr. Goldstein, Mr. Villarreal personally delivered $50,000 in cash to the minister's home, say the people close to the case.

Speaking generally, Mr. Villarreal says it was not his practice to bribe officials. Asked specifically if he passed a bribe to Mr. Makarim, Mr. Villarreal equivocated. "Well, I have to be careful how I answer that," he says, citing his need to avoid contradicting testimony to U.S. prosecutors.

Mr. Makarim, 59, the government minister, says he didn't take a bribe from Harvest or Monsanto. He says he was working from his Jakarta home the day in question and that Mr. Villarreal had probably visited him. "He came over all the time in those days," Mr. Makarim says.

In a brief telephone interview, Mr. Goldstein says "it's probably very true" that Mr. Villarreal passed a bribe. As for his role, Mr. Goldstein says, without elaborating, "I'm quite confident in what I did and didn't do. A lot of it I really don't know." He referred further questions to his attorneys, which, through the attorneys, he declined to answer.

"The investigations in both [Indonesia and the U.S.] are ongoing," John T. Walsh, a New York attorney retained by Mr. Goldstein and Harvest, wrote in a letter to The Wall Street Journal. "Mr. Goldstein does not want to make any public statements that may hinder or jeopardize those ongoing investigations."

In the letter, Mr. Walsh notes that Mr. Goldstein appeared "voluntarily" before investigators in both countries and that neither he nor Harvest has been charged or sanctioned for illegal activity in either country.

Adnan Wirawan, another of Mr. Goldstein's attorneys, who is based in Jakarta, says in an interview: "Harvey approved the $50,000 [for Mr. Villarreal] while he was in Florida on vacation." He says Mr. Goldstein didn't know what the money was for.

In the end, Mr. Makarim didn't give Monsanto what it wanted. The government never scrapped the environmental-impact studies. In 2003, Monsanto shuttered its efforts to sell genetically modified seed in Indonesia.

Monsanto alerted the SEC to possible wrongdoing at its Indonesian subsidiary, PT Monagro Kimia, in 2002. It had become aware of financial irregularities at the unit in March 2001, according to the SEC and the U.S. Department of Justice, which is also investigating the case. Monsanto investigated the allegations but didn't uncover the $50,000 payment, the SEC complaint says.

According to the SEC, local Monsanto officials operated free of oversight and avoided detection for years. The SEC says Monsanto didn't conduct audits of its Indonesian operations, as required by Indonesian law, between 1996 and 2001.

Under pressure from U.S. prosecutors, Mr. Villarreal cut a deal and told them what he knew about Monsanto's dealings with officials and the role of Harvest, according to people familiar with the matter. In return for turning over evidence, he says, he has been granted immunity from prosecution in the U.S.

In May 2004, Mr. Goldstein abruptly fired his protégé. Mr. Villarreal says his boss cited an occasion when Mr. Villarreal paraded around the office with Sophia Latjuba, a top model and movie star and Mr. Villarreal's girlfriend. Mr. Villarreal's then-pregnant wife was back in the U.S. studying opera singing. Colleagues who knew her were embarrassed by the incident, Mr. Villarreal recalls being told by his boss.

Mr. Villarreal says he believes the real reason for his dismissal was a desire to distance Harvest from the Monsanto scandal, which was heating up behind the scenes.

In Indonesia, Mr. Villarreal had become a tabloid sensation because of his affair with Ms. Latjuba. In December, he starred in a nationally televised reality show about his life with the actress, who is now his fiancée. Every night for a week, "Prologue to a Happy Day" followed the couple as they were driven around town in a blue BMW, chatting on their cellphones, shopping in Jakarta's fanciest malls and preparing for a lavish engagement party at a swanky hotel.

In early January 2005, the SEC filed a complaint in the U.S. District Court for the District of Columbia charging Monsanto with violating the Foreign Corrupt Practices Act. It stated that between 1997 and 2002 Monsanto failed to record, or inaccurately recorded, about $700,000 in "illicit payments to at least 140 current and former Indonesian government officials and their family members." That's in addition to the $50,000 bribe, which the complaint detailed at length.

According to the SEC filing, Monsanto's Indonesian unit established a network of local units through which it processed fake and over-invoiced sales. "The management team for Monsanto's Indonesian affiliates then siphoned monies from these unauthorized and improperly documented sales, in part, to finance payments to Indonesian government officials," the SEC's complaint says. One of those payments was $374,000 for the land and construction of a home for a wife of a senior official in the Ministry of Agriculture, according to the complaint.

The SEC complaint doesn't allege that Messrs. Martin, Villarreal and Goldstein played a role in these bribes to Indonesian officials. Johannes Bijlmer, who was president of Monsanto's Indonesian unit at the time, declined to comment, citing a confidentiality agreement he signed with his former employer.

In January, the SEC and the Justice Department said Monsanto agreed to pay $1.5 million to settle the charges without admitting or denying the allegations. Both are still investigating the matter. So is Indonesia's newly created Corruption Eradication Commission, which has asked the U.S. government and Monsanto for their evidence in the case. So far, that co-operation has not been forthcoming.

Mr. Burson, Monsanto's general counsel, says he intends to cooperate but is constrained by the investigations. Richard W. Grime, assistant director of the SEC's enforcement division, says the investigative record remains private and there is no treaty with Indonesia to allow an exchange of evidence.

Erry Riyana Hardjapamekas, the deputy chairman of the Corruption Eradication Commission, has interviewed Messrs. Goldstein, Villarreal and Makarim and intends to recall the three men for more questioning. After appearing before the commission, each man denied wrongdoing in statements to the local press.

Messrs. Goldstein and Villarreal are no longer on speaking terms. Indeed, Mr. Goldstein has made common cause with Mr. Villarreal's jilted wife, Louisa Ibbotson, in an apparent effort to discredit him. Ms. Ibbotson, who now has an infant daughter by Mr. Villarreal, is in the process of divorcing her husband.

In January, Ms. Ibbotson sent Mr. Goldstein an e-mail -- viewed by The Wall Street Journal -- which describes in detail Mr. Villarreal's 1989 arrest for armed robbery. Mr. Villarreal acknowledges the arrest, which he calls a youthful indiscretion.

Mr. Villarreal is now trying to set up his own consulting firm in Jakarta. Mr. Martin's current job is president of the American Chamber of Commerce in Beijing. His responsibilities include lobbying the Chinese government on behalf of U.S. industry.

---- John R. Wilke and Scott Kilman contributed to this article.

Write to Peter Fritsch at This email address is being protected from spambots. You need JavaScript enabled to view it. and Timothy Mapes at This email address is being protected from spambots. You need JavaScript enabled to view it.

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