Bailing out Kanindo comes first, minister says

Bailing out Kanindo comes first, minister says

JAKARTA (JP): The government, under strong pressure to
prosecute businessman Robby Tjahjadi for the debt problems at his
textile business empire, says that its chief priority is to
rescue the company in which huge sums of state funds have been
invested.

"The most important thing is to keep Kanindo in operation,
since several shareholders and banks are involved in the
company's financing," Minister of Justice Oetojo Oesman said on
Saturday.

Kanindo is a group of three textile companies based in Central
Java. Robby is the major shareholder in the group.

Oetojo assured however that the government is still looking
into the legal aspects of the Kanindo debacle although Robby no
longer controls the management.

The minister was speaking to reporters after a meeting with
the Krida Wanita Swadiri Indonesia (KWSI), a self-management
women's organization under SOKSI, a faction in the ruling
political group Golkar.

The management of the Kanindo group of companies has been
taken over by GKBI, the association of batik producers. The
cooperative was given the mandate from two state banks, Bapindo
and BBD, to whom Kanindo owes some Rp 500 billion ($238 million).

Minister of Finance Mar'ie Muhammad has stressed that Robby
remains the majority shareholder of Kanindo and that GKBI is
simply managing the company.

Kanindo, which runs a huge yarn spinning factory near Semarang
in Central Java which employs some 11,000 workers, became a
potential takeover target last month when it defaulted on its
loans to the state banks.

The government has resisted pressure to prosecute Robby
Tjahjadi, a controversial businessman who made a successful
comeback after serving time in the 1970s for heading a luxury car
smuggling syndicate.

Those favoring prosecution drew parallels to the way the
government handled the debacle at Bapindo which nearly went under
when the Golden Key Group belonging to Eddy Tansil could not
repay its $448 million in loans.

They also pointed out that Robby marked up the price of
Kanindo imports as a way of boosting the size of the loans from
the state banks.

In sharp contrast to the Kanindo case, the government moved
quickly to prosecute Tansil and a number of Bapindo directors but
failed to protect the industrial assets of the Golden Key Group.

Several petrochemical projects of the group in Cilegon, West
Java, have been left unattended and many fear that they could
become simply scrap steel.

Tansil was sentenced to 17 years in jail and ordered to pay Rp
500 billion ($238 million) in restitution. Four former Bapindo
directors are still on trial in connection with the Golden Key
Group case.

Staff at the Attorney General's office have also said that
they are monitoring the Kanindo debacle and are gathering data
and information on the possibility that crime was involved.

They said however that they are waiting for word from the
monetary authorities to move against Robby, who has been in
Singapore for heart treatment since the scandal broke last month.
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