Once Indonesian independence was internationally recognized, the fragile unity of the new United States of Indonesia (Republik Indonesia Serikat [RIS]) fractured in a variety of ways, including within the new armed forces as the central government strove to amalgamate the disparate elements of the TNI with the remnants of the KNIL, which had been fighting on the Dutch side only months before. The first challenge occurred within weeks.

On 23 January 1950, forces under the command of the notorious Raymond (“Turk”) Westerling briefly occupied Bandung, supposedly to protect the local regional negara of Pasundan. Sultan Hamid approached Defence Minister Hamengku Buwono and offered to mediate, but Hamengku Buwono declined the offer because he distrusted Hamid. An armed clash occurred the next day in the Kramat area of Jakarta between TNI elements and pro-Westerling forces. The Hatta government got wind of a plot to attack the cabinet during a meeting in Jakarta either on the evening of the same day (24 January) or on 25 January; the meeting was held, but Hatta forestalled the attack by closing the meeting early.

The putsch discredited the Pasundan federalists, but the entire federalist movement was compromised when Hamid's complicity became known. He was arrested in April, accused of planning the attack on the cabinet and of ordering Westerling to kill Hamengku Buwono, Secretary-General of the Defence Department Ali Budiarjo and Armed Forces Chief of Staff Simatupang. Hamid himself was to be wounded in the leg, to direct suspicion away from himself. He apparently believed that he himself would then be the obvious candidate to become the next Minister of Defence.

Revelation of this outlandish plot ended Hamid's career, and he was jailed for over ten years, acquiring a reputation in Indonesian history similar to Benedict Arnold in U.S. history. His autonomous territory of West Kalimantan was abolished, and the affair encouraged the move towards a unitary Republic of Indonesia. The involvement of former Dutch KNIL officers and KNIL deserters inflamed suspicions of the Dutch, enhanced by a statement in which Hamengku Buwono appeared to blame the Dutch high command. The inability of Dutch officers to control their troops, and their inaction against Westerling before the coup despite Indonesian government pleas to restrain him, gave grounds for suspicion.