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The Indonesian Armed Forces and the National Team for the Military Business Transfer denied a claim from New York-based Human Rights Watch on Tuesday that the military had failed to dismantle its “dangerous business empire,” as ordered under a 2004 law designed to enhance civilian rule in the budding democracy.

Promises of increased oversight by President Susilo Bambang Yudhoyono, a market-friendly former general, were “totally inadequate” and left the military unaccountable to the government, the advocacy group said in a report.

“It’s outrageous that despite the parliamentary directive, the government has no plan to take over ownership or management of a single business,” HRW researcher and report author Lisa Misol said in a statement. “Promising to monitor them more closely simply isn’t good enough.”

Despite a 2004 law ordering the military, also known as the TNI, to get out of the business sector by the end of 2009, the generals still control 23 foundations and more than 1,000 cooperatives, including ownership of 55 companies, the report says. These interests had gross assets worth $350 million in 2007 and turned a profit of $28.5 million, according to official figures cited by the report.

Military Spokesman Air Vice Marshall Sagom Tamboen claimed, however, that in reality the armed forces had nothing to do with any activities related to making money, saying that what was left from past military businesses was only a number of small-scale foundations and cooperatives limited to nonprofit activities.

“The cooperatives and the foundations are out of the military structure, and we have laws protecting citizens’ rights to establish cooperatives and foundations,” Tamboen said.

“So if I myself become a member of a cooperative, it’s not because I am a soldier, but because I am a citizen. How can a citizen be banned for being active in a cooperative or foundation?”

Silmy Karim, spokesman for the National Team for the Transfer of Military Businesses, also denied the HRW’s claim, saying the government had issued a decree stipulating the military business transfer before end of 2009.

It was followed by another directive from Defense Minister Purnomo Yusgiantoro in November, he said, to establish an independent team to prepare the military business transfer process.

All the decrees commonly define what the military businesses are, how the transfer process would be conducted and how to manage cooperatives and foundations that use state assets in their operations.

Silmy said the military could not be banned from establishing cooperatives and foundations. However, he said, the military must conduct reorganization with the aim to prevent any structure of cooperation and foundation from integrating with the military organizational structure.

“And no active military soldiers can become member of the cooperative or foundation management board,” he said. “The decree also stipulates that the cooperatives and foundations must only be used for soldiers’ welfare, like for educational or health subsidies .... So I can’t agree if they say that the government had failed.”

“We admit that there are many things still left to be done. But the government and the TNI must be appreciated for the progress and willingness to conduct the reform. Of course all these processes are heading in the right direction.”

The HRW also said in its report that money-making ventures by the military “contribute to crime and corruption, impede military professionalism and distort the function of the military itself.”

In 2007 in Pasuruan, East Java, HRW said Navy personnel killed four people when they opened fire on villagers who were protesting expropriations of land by the Navy decades earlier. The sailors were providing security for a state-owned company that had leased the land from the Navy to operate a plantation.

“In other examples, the military has had a prominent role in large timber operations that have displaced communities from their ancestral lands and fueled rampant illegal logging,” the report said.

“Military units providing protection services to companies have earned off-budget cash payments, raising serious corruption concerns. The military has also been implicated in illegal businesses and extortion operations.”

The report also said that former Defense Minister Juwono Sudarsono acknowledged last year that “rogue elements” of the military could be behind a spate of shootings targeting employees of US miner Freeport McMoRan in Papua.

Sagom said the military never received any report indicating soldiers were behind the attacks. “Please, show us the evidence,” he said.

He also said that the HRW or any other activists should change their perspective about incidents like the one in Pasuruan.

Tamboen said the military never permitted its members to be involved with or provide any kind of security services for a corporation.

“So please differentiate between illegal actions of naughty soldiers with TNI decisions as an institution, because the TNI had never ordered its members to provide security services,” Tamboen said. “If any soldier was found breaking the rule, of course with evidence, then we would punish him,” he said.