Baligate whistle-blower deals with the fallout

Baligate whistle-blower deals with the fallout

JAKARTA (JP): Banking analyst Pradjoto must be the envy of
people who fight a continuing battle against weight gain. He has
shed eight kilograms in the past three months, but it was not on
purpose.

"I weighed 60 kilograms, but now it's 52 kilograms. My pants
are too big," he said.

It is not because he is counting calories or exercising more,
but from the fallout of blowing the whistle on one of the biggest
scandals in the country in recent years.

He told a seminar at the end of July that a senior official of
the Indonesian Bank Restructuring Agency (IBRA) and two
executives of the Golkar Party had colluded to force Bank Bali to
provide a huge commission -- 60 percent of the transaction -- to
help the bank recoup its claims on closed banks.

His statement opened up a Pandora's box of political intrigue
featuring such high-profile characters as State Minister of the
Empowerment of State Enterprises Tanri Abeng, chairman of the
Supreme Advisory Council A.A. Baramuli and even then president
B.J. Habibie.

Pradjoto, 46, was terrorized. Several suspicious-looking
strangers were seen pacing in front of his house, he received
threatening phone calls and a motorist deliberately rammed his
car before speeding off.

His wife, Kirana Dewi, received a call demanding that Pradjoto
organize a news conference to disavow the truth of his statements
about Bank Bali. The caller threatened to kill Pradjoto's family
if he refused.

"I asked my wife what she would do if I called a news
conference, and she said she would ask for a divorce because she
would be ashamed of marrying somebody who was so inconsistent,"
Pradjoto said.

He had not planned to disclaim his statements, but his wife's
comments gave him strength.

The father of four including two teenagers, Pradjoto is also
concerned with issues like drugs and sex education.

"I clip articles from newspapers and give them to them to
read, and I also buy them books. And then we discuss the writing.
We are open about this."

Pradjoto married Kirana, a graduate of the School of Letters
of the University of Diponegoro in Semarang, in 1982. Pradjoto
graduated from the School of Law of the University of Indonesia
in 1980 and then worked at Bapindo, a state bank. He studied
foreign direct investment at Tokyo University in 1986. Two years
later he returned to Indonesia with his master's degree. From
1988 to 1991 he worked on his doctorate, but failed to finish it
when Bapindo refused to provide him with financial aid.

In an interview with The Jakarta Post on Tuesday, Pradjoto,
who writes for several media publications, shared his ideas as an
expert on the country's banking woes and the aftermath of
Baligate.

How did your law firm come into being?

After I was told to resign from Bapindo, I had no permanent
job. I did not want to work for conglomerates, I wanted to fly
my own flag. So, I visited a "close friend" who was quite
successful. I wanted to borrow some money, but as I took a seat
he said: "Never owe your personal standing to somebody else." I
left right away. But I do not bear him any grudge. I thank God I
learned that I should not act like him. And I also learned well
what is the difference between a friend and an acquaintance.

A friend then lent me Rp 10 million, which allowed me to rent
a 20-square-meter room in the Kartika Chandra building. I divided
the office into two, for me and my secretary. I promised to
return the money in six months but I was able to do it in four
months. He sent it back, saying that it was for my children.

Because I speak Japanese, 95 percent of my clients are
Japanese. But now, after the crisis, the number of my Japanese
clients has decreased by 75 percent.

When was your most difficult time?

Things were not easy when I was in Japan. The scholarship was
not enough as I brought my wife and two children there. I washed
dishes, I worked in a gas station, I became a laborer,
transporting books when the library moved ... The good thing is
that as long as you worked hard, it was fine, the payment was
good.

But when I returned to Jakarta, it was totally different.

I bought this (big, attractive) house in 1997. I used to live
in a small house in a crowded area in Serua, Ciputat, you bumped
into people when you walked outside. I was really poor. My wife
made bread and fruit cocktails, packaging them in plastic bags
and selling them to several shops.

What made you interested in banking law?

My father was a law graduate -- he was the founder of
Perdaulatan Rakyat in Yogyakarta. When I was in junior high
school, my father gave me a book by Vivekananda with an
introduction by Bung Karno. It was a wonderful book about law,
philosophy, humanity ... It made me want to study law. That's why
I went to law school.

From 1986 to 1988 I studied foreign direct investment in
Japan. When I returned to Indonesia in 1988, I learned that the
government had issued a banking deregulation, called Pakto 88.
That deregulation opened the barrier to entry, so that traders
could enter. This could result in the interlocking of ownership
and transfer of pricing on a large scale, which would end in the
collapse of the banks. How could they make such a policy? And
then I became interested in the issue, I would watch closely this
issue. And you see, it really happened.

Our banking sector is now in ruins. What's the first thing to
do to fix it?

The new government must have a vision about how important it
is to rebuild the banking sector. We need integrated actions to
guard this sector. The problems have become systematic, so we
need systematic restructuring. In fact, I prefer the word
reconstruction because it is completely shattered. We can't solve
it with detached policies, there must be comprehensive steps.

What has happened is that amid the lack of these comprehensive
actions, the banks were assaulted with things like in the case of
Bank Bali. How sad.

I divulged the scandal because I knew for sure that there were
12 banks which would suffer because of a similar scam -- Habibie
even admitted that there were 20 banks -- I did not have much
time, less than one week. If I was late, the mediation process
for the other 12 banks would have started.

I had no political motives at all. But it turned out that
there were "monsters" behind the case. There might be a power
which systematically runs this mediation business. Whatever the
risk, I will fight because this is very dangerous. If the banking
business falls, then the economy will collapse.

The media, the public, observers pointed their fingers at
Habibie, Baramuli, Tanri Abeng and some other people as if they
were suspects. We can't say that they are guilty, but we can't
say that they are innocent, either. But how can we say that they
are guilty or innocent if they are not thoroughly examined? The
legal process must not be affected by psychological burdens.

After you disclosed the case, you were terrorized. Has it
continued?

No, at least not physically, not like in the month after I
revealed the scandal. I was like a drug kingpin who must be
arrested.

After the scandal was disclosed, for one whole month I
received a flood of invitations to speak in seminars on more or
less similar topics. I was fed up. Once I had to speak three
times a day, in the morning at the Regent Hotel, in the afternoon
at Hotel Borobudur and in the evening at the Financial Club. I
arrived at home really tired. But for me it is like ibadah
(religious service). If I work in my office, I could make much
more money without having to go out.

But it is not like this all the time. When we have to do
something for the public interest, we need to set aside our
private interests. I never refuse any invitations and I never set
my price. If I have to speak in front of students, I even dig out
my pocket for the organizing of the event.

I returned to my normal life only early this month and I
started to go to my office only last week.

I did not think that this Bank Bali case would be that big,
that it would make the International Monetary Fund put pressure
on us.

How do you see the pressure?

Let's look at the matter clearly. Some people in the (Habibie)
government said that the IMF, World Bank and Asia Development
Bank threatened Indonesia. They said this to stir up nationalism,
but I think that is narrow-minded nationalism. I think we should
not see it as a pressure, but as an effort to make us get back on
the right track, to uphold prudent, good governance.

It is impossible for us to say goodbye to the IMF. Thailand
and South Korea could say so because they have recovered even
though the crisis there, like here, started at the same time, in
1997. Thailand was very firm, the government was changed
immediately, and officials who made mistakes were sent to jail.

What about IBRA?

It was quickly set up to handle the crisis, but it is a
subordinate of the government, so it is easily interfered with.
It must be independent, held responsible to the House of
Representatives and under the supervision of the Independent
Review Committee. The organization structure, personnel
management, human resources, the working system, must be
improved. The way they handle the issues does not show that they
are handling a crisis.

I recommend that IBRA divides the debts into two, those
assumed before the crisis and those after the crisis. IBRA can
handle those before the crisis, while the banks which have debts
because of the crisis are handled separately. Assets of these
banks would then be auctioned in the banking sector so that the
process of restructuring would be faster.

What about our situation compared to other countries?

It is very specific. There are many countries which faced
similar problems, like Mexico, Thailand and Japan. They also
dealt with crises, but Indonesia is different. While other
countries are really serious in handling the problems, we pretend
to be serious. (sim)