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.