From the sweet life to a squalid jail cell

A regular on the Jakarta social scene with his glamorous young wife Ara, the world of the Alexanders was one of extravagant parties, expansive mansions and first-class travel.

That world came crashing down on March 13 this year when Indonesian police accused the 60-year-old of embezzlement, after lenders to a failed coal project on the island of Sumatra started asking questions about where their money had gone.

Just five days before his arrest, Mr Alexander celebrated his 60th birthday at home with friends. It was a quieter affair than his 59th birthday, a red-carpet party at the exclusive 1000-room Hotel Mulia in Jakarta.

The event made the social pages, which came as little surprise to friends of the couple. Ara is described as a Kim Kardashian of Jakarta's social scene. Jakarta television covered her birthday party, at which she arrived dressed as a mermaid.

Less than week after his party, Mr Alexander was locked in a damp police cell where he would spend three months, before he was shifted to the high-security Cipinang jail.

Last month he wrote to then prime minister Julia Gillard and Foreign Affairs Minister Bob Carr from jail, to plead his innocence and claim that corrupt police were keeping him behind bars.

''I have been confined to a single room with two or three others,'' he wrote. ''I have been subject to constant demands by police for money to 'settle' the case. The Australian embassy has lobbied on my behalf but there has been no response and we believe letters from ambassador Greg Moriarty have been diverted. My current wife (Ara) and two young children (Joshua and Noriko) have been subjected to threatening phone calls, as well as seizures of accounts.''

Documents obtained by Fairfax Media - the same documents that are in the hands of Indonesian police - provide an insight into the opulent world of the former diplomat, who worked at the Australian embassy in Jakarta from 1977 to 1980.

At the centre of the dispute is Bengkulu Coal Ltd, a venture undertaking coal production in Indonesia, of which Mr Alexander is a founding partner and major shareholder.

It flopped early last year due to cost overruns and failed delivery targets for the quantity and quality of coal that was to be delivered.

In a complex corporate and lending structure spanning Hong Kong, Indonesia, Singapore and the British Virgin Islands, the Bengkulu project was housed in a Hong Kong shelf company called Charm Hill but did its banking via Mr Alexander's British Virgin Islands company, Bengkulu Coal Ltd.

Documents obtained by Fairfax Media reveal large and regular cash advances from Bengkulu Coal for Mr Alexander's personal expenses, interpreted by lenders and Indonesian police as evidence of an embezzlement scheme.

Cash advances and and credit-card payments, totalling more than $500,000 in a year, were made to Mr Alexander and Ara, as well as his two eldest children, Nicholas and Chris.

The accounts show payments for luxury hotels, airfares, personal credit cards and the school fees of his two youngest children, all paid by Bengkulu Coal via another of Mr Alexander's offshore companies, Batavia Investments.

It is easy to see why one key lender to the failed coal project - Singapore-based Gemini Global Pte, operated by German businessman Oliver Herrmann - started asking questions. Gemini Global lent $US500,000 in 2011 to cover working capital costs for Charm Hill.

Gemini's executives can see the money they loaned to Charm Hill appear in Bengkulu Coal's bank account and significant personal expenses being paid from Bengkulu to Mr Alexander and his family.

The in-house lawyer for Gemini Global, a ''Mr Lee'', said: ''I was shocked when confronted with Mr Alexander's private expenses and it's not surprising that the project was running out of operational funds.''

Late last year, armed with documents and unable to recoup its loan, Gemini reported the matter to Indonesian police.

Last week, Mr Alexander was finally removed from the company of murderers, drug dealers and people smugglers in Cipinang prison and put in a large corner suite of one of Jakarta's best hospitals. After 98 days in prison, he has a chest infection and a newly diagnosed kidney problem, both exacerbated by stress and detention in squalid surroundings.

Mr Alexander was angry when presented with the bank documents and said the reason for the confusion was simple.

As Charm Hill did not have its own bank account, he said he allowed an account he controlled with HSBC, in the name Bengkulu Coal, to be used. As a result, Mr Alexander said, ''legitimate company expenses'' and ''legitimate private expenses'' had been muddled.

''Yes there are personal expenses being paid out of that account but every dollar invested by Gemini was spent on legitimate costs,'' he said.

The accounts supplied to Fairfax show payments totalling more than $US500,000 being made by Bengkulu Coal to keep the Charm Hill project going.

''I don't know where people are getting this stuff from,'' Mr Alexander said. ''This is outrageous.''

He said the cash advances shown in the accounts were legitimate parts of his remuneration as a director of Bengkulu Coal and were irrelevant to the commercial dispute and the reason for his arrest.

''After the coal project failed after cost blowouts, I'm probably the only party remaining with anything to go after,'' he said.

Mr Herrmann says that he plans to take civil action in Singapore to recoup his funds.