The Year Of Laying Cable Dangerously Two men from opposite worlds, both caught in the Clinton scandals, forge a troubled partnership in Jakarta.
(FORTUNE Magazine) – For a tycoon at the top of a crumbling country, James Riady was remarkably serene when he asked a reporter to join him in prayer. The setting was his 16-room mansion, the only structure on a man-made island on the edge of a golf course in Indonesia's Lippo Village--a perfectly groomed suburb built on what was once a rice paddy. On Riady's estate, a rooster is crowing, water is cascading from marble fountains, and a barefoot maid is serving breakfast in a room filled with books about God. "O Lord, bless this discussion," says Riady, shutting his eyes behind gold-rimmed glasses that match the color of nearly everything in his house. "Bless this meal. Bless the people who prepared it. Thank you for this life, Jesus."
Riady, the 44-year-old heir to one of Asia's biggest family empires, needs plenty of divine help these days--and not just because he recently agreed to pay the largest campaign fine in U.S. history. Riady and his reclusive billionaire father, Mochtar, whose network of more than 50 private and publicly traded companies, known as the Lippo Group, stretches from Jakarta to Beijing, are embarked on their biggest challenge ever: morphing their $12 billion (assets) empire into what they call "the GE of Indonesia," with special emphasis on cable TV, as well as cellular phones, online shopping, and other Internet services. In their view, they can help save the world's fourth most populous country--and, at the same time, make themselves far richer.
It's a sharply different scene on the polluted streets of Jakarta, about an hour's drive to the east, where children beg for food in the sweltering heat and protests against corruption clog traffic almost daily. Fearing that he'll be late to a meeting, Jim Guy Tucker, 58, a former governor of Arkansas and now Riady's cable partner, takes to the smog-filled sky in a Lippo chopper. "Over a ten-year period," Tucker says, staring out the window at the city's incongruous mix of shimmering office towers and teeming slums, "you could have broadband wire in 50% of those homes."
Riady and Tucker have come a long way since they first shook hands in Little Rock's Second Presbyterian Church more than two decades ago. And although they are products of widely divergent cultures, they share one dubious distinction: They were the biggest fish caught in the net of investigations that surrounded the Clinton White House. In March, Riady pled guilty to illegally reimbursing campaign contributions to Bill Clinton and Democratic Party groups in the early 1990s (more than $1 million was funneled this way by Lippo Group associates) and agreed to pay an $8.6 million fine. Tucker, twice convicted of fraud in the Whitewater probes, was forced to vacate the governor's mansion in 1996--the same year he teamed up with Riady.
Now the disgraced duo may go down as two of the biggest pipe-dreamers in Asian business history. Last summer, with Tucker's help, the Riadys listed a new company, AcrossAsia Multimedia, on the GEM exchange, Hong Kong's high-risk tech bourse. Investor response was so overwhelming that the firm instantly became the largest on the exchange, with a market capitalization of $2.1 billion. A key part of the plan was to build a cable TV infrastructure in Indonesia called Kabelvision, then replicate it across Asia.
But the venture is now in deep trouble, haunted by the tainted pasts of the partners and overwhelmed by the difficulty of bringing Western business practices and technology to one of the world's most corrupt and unstable countries. Today Kabelvision is bogged down in mismanagement, infighting, and a serious cash squeeze, while the relationship between Tucker and Riady is being severely tested. Rival camps of Indonesian executives and American expatriates seem locked in a cultural holy war--mirroring what is playing out in the streets and power chambers of Jakarta. "What you see here is a microcosm of what's wrong with the Indonesian government," says Peter Langlois, a Kabelvision executive. "It's unclear who's really flying the plane."
The notion of marketing cable TV in a country where only one in seven people has a television set, and a good number are hooked up to car batteries, may seem far-fetched. When the country is Indonesia, it can also be deadly. In the past few years, thousands of people have been killed in separatist and ethnic conflicts throughout the 17,500-island archipelago, which is largely Muslim but is home to more than 300 ethnic groups and 250 languages. Crime is soaring, foreign investment is down to a trickle, and the rupiah's value has dropped nearly 25% since November. Indeed, the country is beginning to look as it did in The Year of Living Dangerously, a film that chronicled the bloody days leading up to the overthrow of strongman Sukarno in 1966. Three years ago, violent riots led to the fall of his replacement, Suharto, who had ruled with an iron fist for three decades. A fragile democracy is now in place, but Indonesia's current President, Abdurrahman Wahid, who is legally blind, seems destined to either impose martial law or be impeached.
During FORTUNE's visit, the U.S. embassy was closed because of a terrorist threat. A week earlier, Muslim extremists swept through hotels near Jakarta, looking to evict Americans. The night after this reporter was invited by a Kabelvision employee for drinks at JJ's, a popular Western-style bar, a gang of 150 extremists, dressed in white and wielding swords, machetes, and bamboo sticks, raided the joint, destroying furniture and chasing out customers. "Economic nationalism is definitely on the rise," says Richard Jacobson, an ex-CIA agent who runs a corporate intelligence agency in Jakarta. "The foreign expat community is dwindling. The U.S. has almost no influence here now. And corruption doesn't flow from the center anymore, so it's worse. Now you have to pay everyone down the line, not just one or two ministers."
Given this backdrop, it's not surprising that Riady rarely speaks to the press, let alone invites reporters to tour his businesses and his house, where he lives with his wife, four children, and parents. But Riady has been so demonized in the foreign media he wants to disprove the notion that, as Indonesian human rights activist Hendardi puts it, "his major achievement was to export corruption to the U.S." Instead, he wants to be seen as importing the best of American values and culture into Indonesia. Indeed, the Lippo empire, founded on banking and insurance, has grown to include a supermall, Western-style stores, and California-style housing developments.
Still, Riady remains formal and guarded. He refuses to pose for pictures that could play up his wealth or lifestyle--such as jogging, which he and his 72-year-old father do regularly, or soaring in one of his Bell choppers above Karawaci, known as Lippo Village, which includes a hospital, a university, and a new cyberpark. For security reasons, Riady's aides use secret codes. The mansion is called the White House because of "James' friendship with Clinton," reveals Okky Adhiep, a top Riady aide. Mochtar, who is still the controlling force behind Lippo, is known as Rose 1, James is Rose 2, and Tucker is Carnation 9.
Despite the secrecy, it's hard not to like Riady and Tucker. With his Jimmy Stewart looks and his social awkwardness, the ex-governor comes across as a hero straight off the frontier. Riady--genteel and manicured--conjures up an image of a wise and benevolent Asian prince. Both are well-mannered, soft-spoken, driven men, whose visions of technology inspire the people who work around them. But neither man can relax, and their moods are rarely light. "James is a good motivator and a brilliant planner," says Hanifah Komala, who runs Lippo's retailing unit. "But he doesn't know when to quit. We're always out of breath trying to implement his dreams." Similarly, Kabelvision's Dwight Harlan loathes sitting next to Tucker on planes because he can't get his close friend to stop talking business. "Drives me nuts," he says. "My ears will be red by day's end." On the golf course in Lippo Village, Tucker can't resist giving advice or announcing the angles and wind factors behind every stroke he takes. But there's a sadness that hangs over him. "It eats at him," says Harlan, referring to Tucker's convictions. "He will never be at peace. It destroyed him financially and physically."
Rose 2 and Carnation 9 share another trait: They both talk about the need for businesses to embrace transparency and accountability, but they seem more comfortable operating in the shadows. Indeed, the place where their relationship bloomed, Little Rock in the 1980s, had a little Indonesia in it. It was an environment in which business deals were typically done by a small group of insiders who lived and worked in close proximity.
When they met in 1979, Riady had just graduated from the University of Southern California and was starting out in the banking business. Tucker was a 36-year-old Democratic Congressman who had already served as Arkansas' attorney general. His political career shone brighter than Clinton's, and many saw him as future presidential timber. But after losing a costly race, he left politics for the cable TV business, forming partnerships in Arkansas, Texas, and Europe. In the mid-1980s he teamed up to do a series of deals with Little Rock bankers Jim McDougal and David Hale, both of whom ended up behind bars during the Whitewater probe. Those deals would lead to Tucker's downfall as well.
Riady took a different but no less controversial path. As ethnic Chinese Indonesians, the Riadys are part of a privileged, often despised group that makes up 3% of the population but controlled 70% of the country's economy during the Suharto years. In the riots that led to Suharto's downfall, mobs of angry pribumis (indigenous Indonesians) destroyed hundreds of Chinese-owned shops, banks, and homes. A frenzied army of 10,000 people torched and looted the Riadys' Lippo Village supermall, the largest shopping center in the country, killing 86 people.
Before starting Lippo Bank, Mochtar Riady was a longtime partner with Indonesia's wealthiest family, the Salims, also ethnic Chinese, who controlled the Bank of Central Asia. Mochtar, who owned 17% of the bank and was its chairman, grew it into Indonesia's largest private bank. The Salims owed their good fortune to their friendship with Suharto (two of Suharto's kids owned more than 30% of BCA). Now the debt-ridden bank is in the hands of a government agency, along with stakes in more than 100 Salim Group companies. And Suharto and his family have been vilified for amassing their own fortune, estimated at $40 billion back in 1998.
Riady denies that his father and the Lippo Group were aided by their connections to Suharto. "He's not all the things the press says he is," Riady insists. "We did well under his leadership. Many businesses flourished without having to be in partnership with people close to him. Lippo is an example. We were determined to stay independent and be as nonpolitical as possible." That's about as accurate as saying that Rockefeller Center flourished without having benefited from an oil monopoly. "Mochtar knew how to play the game, and I'm sure money was exchanged," says Vasuki Shastry, a former journalist in Indonesia and now a spokesman for the International Monetary Fund. "In the early years of Lippo, the view was that there was implicit protection from the Salims, who were on good terms with Suharto." (James declined to respond to written questions asking whether the Riadys or Lippo made payments to Suharto or his family, or contributed to Suharto's ruling political party.)
In the early 1980s, James was assigned the task of establishing a banking beachhead for the Lippo Group on U.S. shores. The Riadys first set their sights on the City National Bank of Florida. But the deal fell apart "because they realized they would have to file papers with the U.S. government saying who the beneficial owner of the stock was," recalls a banker on the scene who suspected that "not very far behind Salim you were going to find someone named Suharto."
Next they purchased a major interest in Arkansas' Worthen Bank in 1983--this time without the Salims--and installed young James as the head of international lending. (Mochtar became a director.) But they soon reverted to old habits: When additional funds were needed a year later, the Salims bought a 10% stake. Within two years the bank was in financial trouble and was cited by regulators for improper lending to a series of overseas firms controlled by the Riadys and Salims. James was eased from his post, and the Riadys eventually sold their stake.
After Worthen came the Bank of Trade in California, the oldest Chinese-American bank, where Riady promptly found himself in more hot water. This time, the feds issued cease-and-desist orders for "hazardous lending" and violations of money-laundering statutes. Riady sold that bank as well, but not before using it in the daisy chain of political contributions that led to his recent guilty plea.
Meanwhile, Tucker followed Clinton as governor in 1992 and, despite a reputation for arrogance, received high marks for bringing a no-nonsense business approach to the state budget. With Riady's participation, he also formed a "sister state" agreement with Jakarta. At a dinner he hosted in the governor's mansion in 1993, which Riady attended, Tucker spoke about the promise of cable TV. "He was so knowledgeable and articulate," recalls Riady. "And he definitely knows more about the cable business than anyone I know. He makes things happen."
Tucker's association with McDougal and Hale caught up with him in 1995, when Whitewater independent counsel Ken Starr indicted him for fraud in two criminal cases. Tucker launched a verbal assault on Starr but was convicted by a jury in one case of conspiracy and mail fraud and sentenced to 18 months of house arrest. Facing a certain prison term if convicted in the second case, Tucker admitted to conspiring to defraud the IRS. To this day, however, he maintains his innocence on every charge and continues to file one appeal after another (see box).
As for Riady, mountains of articles have been written and scores of hearings held on his links to the Clinton White House. What emerges is an inexhaustible effort to gain influence--Riady's 20 visits to the White House; his hiring of Clinton's friends and former aides; his efforts to help his top deputy, John Huang, obtain posts at the Commerce Department and the Democratic National Committee. Like Tucker, Riady finds it hard to concede wrongdoing, even though, as part of his guilty plea, he confessed to using "deceitful and dishonest means" in an attempt to influence U.S. government policies.
Indeed, Tucker's decision to invest $6.5 million in the Indonesia venture in 1996--a month after his first conviction--has raised questions about whether this was another case of Riady's attempting to gain influence by, in effect, paying off Tucker to prevent him from providing damaging information about the Clintons. The details of the deal were, on the face of it, unusual. Although Tucker says he put $1.5 million in cash into Riady's newly formed cable TV venture--this at a time when he was drowning in legal bills and awaiting a liver transplant--he also got a Lippo-backed loan for $5 million. The go-between in the deal was a man named Joe Giroir, a former Worthen Bank shareholder and managing director of Little Rock's Rose Law Firm, where he had once been Hillary Clinton's boss. Tucker adamantly denies there was any quid pro quo. The Riady venture, he says, simply seemed like a good bet. The cash, he adds, "was a major part of my net worth." (A 1994 financial statement shows that his net worth at the time was $5.5 million.) Indeed, to try to end the speculation, Tucker provided FORTUNE with copies of his agreement and wire-transfer records, which appear to be legitimate, according to an outside expert who reviewed them. Even so, Tucker was guaranteed a 5% annual return on his entire investment, a sweetheart deal by any measure.
Like everything in Indonesia, Riady's effort to bring cable TV to Jakarta got off to a slow start. During Suharto's reign, it was almost impossible for companies to do infrastructure deals or obtain licenses without giving the family a cut. So Riady began his cable buildout in the mid-1990s by becoming a minor partner in and utilizing the pay-TV license of a company partly owned by one of Suharto's sons and the Salim family. On Tucker's recommendation, Riady brought another Arkansan aboard to run the operation: Dwight Harlan, who had built Tucker's cable systems in Texas and outside Little Rock. In turn, Harlan brought in his own team--a colorful cast of cable characters, mostly from America's South.
In some of Asia's head-end rooms (the technological brains of a cable TV operation), employees wear white clothes and gloves, believing they will prevent signal interference. At Kabelvision's state-of-the-art head-end, Harlan chain-smokes Marlboros--despite no-smoking signs, a heart attack, and a recent quadruple bypass. "Don't tell my doctor," he says, galloping across the room in his cowboy boots. Then there's Harlan's deputy from Kentucky, cable-hanging crackerjack David "Rusty" Smith, whose father, two uncles, and brother were also wire-hangers. Smith wears a gold "S" Superman necklace to work. "He's a good old country boy," says Harlan. "He can handle fiber-optic wires thinner than your hair. And Rusty's the kind of guy you want with you if you get into a fight. He wants to get his licks in."
On many nights the gang can be found at B.A.T.S., a popular bar for expats. Harlan is known by his pals as "Captain Hotdog." Rusty is "Round Man." And Kabelvision's construction manager, Robert Bird, an Arizonan, is "Cactus Jack." The man who tries to keep their glasses full is Marshall Cooper, the firm's Texas-schooled CFO, better known as "MOM" (for Marshall One More). The guys are talented and tough; they work hard, and they drink hard to cope with the daily frustrations of trying to build a cable empire in a country that is unraveling.
Amazingly, the team has managed to hang or bury 1,200 miles of cable and 375 miles of fiber-optic wire. The company has roughly 50,000 subscribers, who can now tune in to 45 channels, including CNN, Star Sports, and the Country Music Channel. Dozens of office buildings, including the U.S. embassy, enjoy high-speed broadband, thanks to Lippo. But the frustrations are endless. Since none of Jakarta has been mapped by the government or utility companies, every street had to be measured and entered into a database. And because the city is so congested, roughly 90% of the cable has to be strung on power lines so snarled and tangled that Kabelvision workers call them "grapevines." The company's prospectus says cable is hung according to U.S. standards (i.e., 40 inches from electric wires), but Smith admits "there's no way" to do that in Jakarta all the time.
In the U.S., three or four guys in a crew typically hang cable with a winch. In Jakarta, it's often done by hand and requires crews of more than a dozen workers. For one thing, getting a truck to the site is difficult, given the number of vehicles and people clogging most streets. More than 11 million residents are crammed into Jakarta--a city where cars don't pull over for ambulances because they can't.
But the real problems don't begin until the cable is hung. Lightning destroys it, pollution corrodes it, and frequent power outages disable it. What's more, police and security guards in Jakarta still use low-band, two-way radios that can interfere with the cable signals. Then there's the problem of theft. "We have to run through poor neighborhoods to get to other areas," says Smith. "People will sometimes cut the cable to sell it, or, thinking it's electrical, they'll try and hook it up to their houses."
Running the cable underground is no less risky. There are no maps of underground wires and pipes, and the concept of call-before-you-dig hasn't yet reached the archipelago. As a result, utility firms just cut through the cables when they're in the way. During FORTUNE's visit, an underground fiber-optic artery was snipped. Kabelvision COO Robin Maule suspected that a rival company did it but wouldn't name names. Even minor incidents can lead to mob fury. Last year a Kabelvision contractor's truck was stolen by a teenager. Someone yelled "pencuri" (thief), prompting a group of motorcyclists to give chase. The kid was beaten with sticks, doused with gasoline, and burned to death.
Graft? Nearly every time a Kabelvision truck is parked on a street, someone appears to demand cash for having "protected it." A failure to fork over some rupiah could lead to threats that the truck will be damaged in the future. Then there are the bandits who claim to be in charge of each street. "We have a guy who goes around with rupiah in his pocket," concedes Harlan. "Every-one has his hand out." Dealing with the bigger fish is equally dicey. For instance, Indonesia's state-owned power company had long granted permits to the upstart Kabelvision, enabling it to string cable on power poles. But the permits stopped coming in November, when the power company began claiming that the cable wires were interfering with the country's power supply. Harlan's team suspects this bogus claim was nothing more than a shakedown. Did they pay? Nobody will say.
But the biggest problem by far for Kabelvision's expats has been getting along with their Indonesian colleagues. The government tries to limit the number of expats in each firm; the national goal is to let them train Indonesian staffers, then go home. Kabelvision's half-dozen expats constitute less than 2% of the company's work force. But training Indonesians in Western work habits, let alone high tech, has been a challenge. "I have to train and retrain," says Smith. "They keep forgetting." Some of the difficulty is clearly cultural: In the early years, wire-hangers wandered off job sites to find mosques for their prayers; now Smith keeps prayer towels inside Kabelvision trucks. But some is the legacy of poverty in a Third World nation that only recently emerged from decades of military dictatorship. Manual workers, who are paid $2 a day, dig trenches in their bare feet, swinging pickaxes within inches of their toes. Contractors say they can't afford modern equipment. "Count their toes," says Smith at one site. "They have all their toes. I don't know how they do it."
Many of the Indonesian execs find the Americans an odd and off-putting bunch. Some don't appreciate the Arkansas-style humor--"'Stretching my tweety-bird ass' doesn't go over well here," Langlois acknowledges--and feel excluded when the expats make decisions at the local bar. "It's a challenge working with expatriates," says Handoko Tanuadji, a longtime Riady colleague and USC alum who ran Kabelvision until recently. "I could not say it's smooth, but we are not killing each other. It's not easy to bridge the culture. It's damn difficult."
Despite these obstacles, by 1997 the Arkansas-led team was beaming foreign TV shows to Jakarta cable customers. Then financial disaster devastated Asia. No Asian nation in the past 50 years has experienced a reversal of fortune as bad as Indonesia's, and the cable venture wasn't spared. But in the wake of the crisis, the Riady family managed to obtain a license of its own, buy control of the project, and reorganize the cable venture into a new company.
In early 1999, Tucker moved to Jakarta to help salvage the operation--and his own investment. "I came here to poke the body with my finger and see if it would twitch," he says. "To my surprise, it did." He remembers flying with Mochtar that year and talking about broadband. "How valuable do you think this will be?" Tucker recalls Mochtar asking. "I hate to be too optimistic," Tucker replied, "but I can imagine $500 million." Mochtar smiled. "You're much too conservative," he said.
Once he got to Jakarta, Tucker became Kabelvision's de facto CEO and, by all accounts, turned the operation around. Nonpaying customers were disconnected, financial controls were put in place, and the company showed signs of growth. But the February 2000 prospectus of Kabelvision, the reorganized company that went public on Indonesia's Surabaya exchange, mentions Tucker only in a footnote, as a conveyor of assets. Similarly, last July's prospectus for AcrossAsia (which owns 58% of Kabelvision) lists Tucker as a "senior advisor" and makes no mention of James Riady, though he was a driving force in its day-to-day operations.
The launch of AcrossAsia, a Cayman Islands entity, was an astonishing success. The Riadys' 79% stake in the company was worth more than $1.6 billion on the day of the IPO. Tucker's stake was listed at just under 2%, the same as that held by Giroir, who had gotten him into the deal in the first place. Other investors include Hong Kong's wealthiest tycoon, Li Ka-shing, a large Japanese bank, the Kingdom of Jordan, and a conglomerate controlled by the Chinese government. Chief Executive C.W. Cheng boasts 25 years of experience in computing, including top posts with Philips and Bell Telephone.
Still, all the money and talent in the world couldn't make marketing cable TV in Indonesia easy. Kabelvision employs 200 telemarketers, but "60% of our customers don't understand what you're trying to sell them," Tucker says. When the company mailed out a four-inch piece of cable to prospective customers with a letter explaining that it was all they needed to have cable TV, many Indonesians tried screwing the wire into the backs of their TVs. "When you start throwing around names like HBO, CNN, and ESPN, most Indonesians don't even know what they are," adds Kabelvision's Langlois. "And 90% of the country can't speak English well enough to enjoy it on TV."
Recognizing that fact, Kabelvision planned to launch two Indonesian-language channels last summer, as well as to digitize the entire operation. But disaster struck again: The Wall Street Journal published a front-page story and an editorial detailing Tucker's involvement in the project. The publicity--and the concern that having a twice-convicted felon in a visible position might frighten investors--led to Tucker's being removed from Kabelvision's helm and exiled to Hong Kong to shop for other cable deals. "Cheng said that this is gonna kill us and that he [Tucker] has to keep a low profile," Langlois explained a few months later.
Tucker's ouster came at a time of worsening tensions between the expats and the Indonesian staffers. Tucker had helped force out a figurehead Indonesian president and then humiliated another Indonesian executive at a meeting Riady attended. After that, many of the Indonesians banded together to make life difficult for the expats.
By the start of this year, the expats were claiming that Handoko, Tucker's replacement, had been holding up expense reports, blocking or altering deals at the 11th hour, padding the payroll with friends who had no TV experience, plotting against Harlan, and withholding payments to key vendors, even as he allegedly spent excessive amounts on pricey furniture and computers to refurbish offices. (Handoko didn't respond to the allegations.)
It was not the first time foreign businessmen had run aground in Indonesia. The Culture of Business in Indonesia, a collection of interviews with Indonesian and American executives, describes a way of doing business radically different from the West's. "If you don't understand the society, you will feel that every day is frustration, and you may start to dislike Indonesia," warns Sony Harsono, a senior partner in a prominent Indonesian accounting firm. "Reluctance to say no, decision-making and management by consensus, the tendency to be very respectful toward superiors and to wait for directions from superiors before initiating action, all often seem to foreigners to slow down the pace of business."
It's not surprising then that Riady, caught between his reverence for American values and Indonesian traditions, hasn't been able to solve Kabelvision's management problems. Langlois, initially brought on as a consultant last year, recalls being invited into the boardroom three months later. "Sit at the head of the table so that I can see your eyes," Riady told him. "What do you think of my company?" Langlois, an architect of Indonesia's TV industry in the 1980s, was full of praise for Harlan and his team of expats, but added, "The Indonesian staff is the worst I've ever seen." Riady's response: "I agree with you 100%. You're hired."
But Riady hasn't taken any steps to give the expats back the power they had under Tucker. As a result, Tucker is said to be shopping for another job, and most of the expats are considering bailing out--which could deal a fatal blow to the venture. "I couldn't adjust to the dishonesty," said Bob Bird, who recently left his post. "Tucker and I would have great sympathy meetings about all the corruption and crap going on. Everybody's getting a kickback. Ask any vendor--they [Kabelvision] are not paying their bills, they want to get the expats out of there, and Cheng wants to know where in hell the money is going. James listens, gives lip service, but then nothing changes."
Bird says one of his worst days was when Riady told him to find out why a favored contractor was no longer being used. Bird explained that the contractor was incompetent, having placed cable so close to power transformers it had endangered the lives of workers. "It's a miracle somebody wasn't killed," says Bird. To his surprise, Riady ordered him to continue using the contractor. "James, I'm not going to do it," Bird responded. "I don't want somebody killed." According to Bird, Riady seemed unmoved and replied, "People are cheap here. Labor is cheap here." Bird ultimately replaced the contractor anyway.
In recent months, the cash situation at Kabelvision has gotten so bad that Lippo has purchased ad time on the network so that the company could reach its financial target. Meanwhile, the number of cable subscribers, 50,000, has been flat since last summer. Some expats are concerned that AcrossAsia may be holding back money investors earmarked for the cable venture. In December, before the buildout was put on hold, Kabelvision had only $1 million in the bank. That led to wild speculation by expats that the Riadys may be squeezing the venture in order to buy more of its stock cheaply before driving the price up again. "I like that theory, because it means there's a reason to the madness," says a foreign vendor who hasn't been paid for months. It's not out of the question; a year ago the Riadys and Lippo were fined more than $500,000--one of the largest securities-trading penalties ever meted out in Indonesia--for artificially inflating the stock price of a company they owned called Lippo E-net.
Meanwhile, the operation teeters toward collapse. In June, Harlan was ousted from the Kabelvision board, Robin Maule left his post, and Billy Sindoro, who was at the center of the E-net scandal, replaced Handoko as president. Unlike Harlan and Maule, Sindoro has no TV experience.
In the midst of all the chaos, Riady told FORTUNE he was "taking off" from the cable business for at least two years to study divinity and political science. For one thing, he suffered three heart blockages a year ago, had a balloon inserted, and is rethinking his life. "Some might call it a sabbatical, but I may not come back to what I did before," he says. "I don't like the details of running a business." Riady is expanding his private-school system in Lippo Village--where the Christian teachers are not permitted to smoke in their own homes or visit a nightclub in their spare time--hoping to open 1,000 schools in Indonesia's poorest villages. He says he wants to lift the "spiritual and moral standards" of his country. He has also met with Pat Robertson to discuss launching a Christian network in Indonesia.
Riady says he became a born-again Christian in 1990 after his business success grew into an "emptiness" that led to a depression. "I was so desperate," he says. "I couldn't even look at my wife, or talk to her, or kiss her. I started praying in my room, and God showed me this film--a reflection of my life. Everything that came out was all the sins I committed. I thought I was a good man. God said, 'You're a horrible man.' I cried and cried and cried--big sins, small sins. Since then I try to be a better person, and my life has changed. One by one, the family has all turned to the Lord."
But can AcrossAsia and Kabelvision be saved? With Riady embarking on his divinity journey and Tucker looking elsewhere for work, prospects don't look good. One inside source says Tucker is fighting often with CEO Cheng in Hong Kong. Even Giroir seems to be growing bearish: He unloaded 70% of his stake in a complex stock swap with a Hong Kong company.
But appearances in Indonesia can be deceptive. On the streets of Jakarta, it's often difficult to tell which protests are real and which involve unemployed people being paid $1 a day. So it is with Mochtar Riady, who unexpectedly stepped down from AcrossAsia's board in May, causing an already battered stock to decline further. Even the expats were caught by surprise. "He's sharp as a tack, but he's got three agendas," says Bird. "The one he lets you in on, the one he's supposed to follow according to the Indonesians, and the one he really wants to obtain." Adds Giroir: "As long as the father can walk and talk, he'll have the final word."
In The Year of Living Dangerously, an Indonesian photographer holds two Javanese puppets up in front of a wall. "If you want to understand Jakarta, you have to understand the wayang, the sacred shadow play," he tells a foreign journalist. "You must watch their shadows, not the puppets." However the Kabelvision drama plays out, it's unlikely many American shadows will be left on the wall.