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. (02)