AGO probes Rp 1t graft case at Bank Mandiri

AGO probes Rp 1t graft case at Bank Mandiri

Eva C. Komandjaja, The Jakarta Post, Jakarta

State-owned Bank Mandiri, the country's largest bank in terms of
assets, is being investigated by the Attorney General's Office
(AGO) over possible graft involving more than Rp 1 trillion
(US$107 million) due to huge bad loans.

Deputy Attorney General for Special Crimes Sudhono Iswahyudi
said on Monday his office in cooperation with the Supreme Audit
Agency (BPK), found irregularities in the loans given by Bank
Mandiri to 28 companies.

"We have found several cases where the bank provided credit
facilities to ineligible companies and violated procedures on
debt claims taken over from the Indonesian Bank Restructuring
Agency (IBRA)," he said.

Sudhono said the credit facilities later became bad loans,
thus inflicting huge losses on the state.

"I cannot mention the specific amount of money since our
investigation is not finished yet. But I can only say the state
losses could exceed Rp 1 trillion," he said.

Sudhono mentioned that four out of the 28 companies are under
intensive investigation. They were identified only as LMK, CGM,
SZP and APM/ATM.

A source at the Attorney General's Office said private
television station PT Lativi Media Karya was among the companies,
with bad loans of up to Rp 361 billion.

Not only was Bank Mandiri's head office allegedly involved in
providing non-performing loans to the companies, but also its
branches in Pekanbaru in Riau and Medan in North Sumatra.

"The loans were initially given in the 1990s and the companies
receiving them were recapitalized and refinanced again before
Bank Mandiri took over the debt claims and became non-performing
loans," Sudhono said.

He said the Attorney General's Office had formed 10 teams to
further investigate the case. Each team comprises between five
and six attorneys.

"The first step to be taken by the teams is to examine the
four companies on the top of our list and question Bank Mandiri's
board of directors as well as credit analysts before we can name
any suspects," Sudhono added.

The level of non-performing loans (NPLs) at Bank Mandiri in
last year's third quarter had reached 7.49 percent, above the
ceiling of 5 percent set by Bank Indonesia.

The bank refused in early January 2005 to help state-owned
paper producer PT Kertas Kraft Aceh (KAA), saying that injecting
fresh funds into the company would likely put Mandiri at further
risk.

Apart from Bank Mandiri's case, the office also continued its
investigation into major graft cases linked with the Bank
Indonesia Liquidity Support (BLBI) given to the debtors that have
not been cleared by the government.

"There are 16 uncooperative debtors. They have not showed any
intention of meeting their obligations. We will investigate them
further before bringing their cases to court as soon as
possible," Sudhono said.