Bank DKI boss blamed for $21.5m bad credit

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)