Bank DKI boss blamed for $21.5m bad credit

JAKARTA (JP): City councilors have blamed the "authoritarian" management style of Bank DKI president Soeharto for saddling the city-owned institution with bad credit of about Rp 172 billion (US$21.5 million).

Jonggi Sihombing and Syarief Zulkarnaen of Commission C for financial affairs said on Tuesday the Jakarta Prosecutor's Office should question Soeharto forthwith. They said the city administration's plan to fire him was inadequate because he should also be held responsible for gross mismanagement.

"The bad credits were mainly caused by Soeharto's authoritarian management style, especially in the process of granting the credits," Jonggi said.

"Soeharto, for example, sometimes granted credits to certain parties without the consent of the board of supervisors which is chaired by Governor Sutiyoso."

The administration is burdened with great losses due to the unprofessional practices, he added.

He reiterated that firing Soeharto would be insufficient punishment. "He should be held responsible and the prosecutor's office should soon investigate it."

A source at City Hall said bad credits at Bank DKI reached Rp 172 billion as of the middle of October.

The source said Soeharto granted the credits to companies without considering accountability or credibility, often ignoring other directors' advice.

This year alone, Soeharto granted credit worth Rp 50 billion to PT Jaya Real Properti for construction of a housing complex without consulting the board, even though other directors opposed the dispensation, the source said.

"Other directors warned that the company would fail to return the credits due to the economic crisis," he said.

The bank's regulations stipulate that Bank DKI should consult with the board of supervisors to award credit in excess of Rp 5 billion.

The source also said that credit was often granted without verification of the validity of collateral, required to be worth 150 percent of the credit value.

"But most of the credit was granted even without proper collateral, (such as) Rp 800 million in credit to the National Family Planning Board (BKKBN), which gave about Rp 200 million collateral in the form of land," the source said.

The source alleged that Rp 5.5 billion granted to PT Multan Pandira for office building construction, Rp 3 billion to the Al Falah foundation and Rp 1 billion to PT Wiros were other examples of bad credit.

Bank DKI's image has also been maligned by the fraudulent purchase of 124.8 hectares of land in Bogor. In addition to Soeharto, the bank's director of general affairs Djunaidy Albaghdady and marketing chief Bassar Soetardjo are also facing the prospect of being fired.

Syarief said Bank DKI should change with the times. "The bank should be led by the younger generation to have the new spirit of reform." (ind)