Bank Mandiri officials quizzed over lending scam

Bank Mandiri officials quizzed over lending scam

Eva C. Komandjaja, The Jakarta Post/Jakarta

The Attorney General's Office questioned on Friday three
officials of the giant state-owned Bank Mandiri as it aimed to
speed up the investigation into alleged irregularities in the
provision of more than Rp 1 trillion (US$107 million) in loans to
several companies.

Deputy Attorney General for Special Crimes Sudhono Iswahyudi
said that his office had also interrogated the finance director
of TV broadcasting company PT Lativi Media Karya, one of the
bank's debtor companies.

The office did not provide the names of the Bank Mandiri
officials nor the Lativi director, but office spokesman R.J.
Soehandojo later gave the initials of the three officials as WW,
MA, and FE, all of whom were charged with giving credit
facilities to a company called PT Siak Zamrud Pusaka.

"These (officials) are being questioned over procedures in
giving credit to the company and who was really in charge or
decided to give credit to the company (SZP)," Soehandojo said,
but quickly added that three officials were questioned as
witnesses, not suspects. The Lativi director was also questioned
as a witness.

The lending scandal emerged after the Supreme Audit Agency
(BPK) found irregularities in the channeling of Rp 1 trillion in
loans to 24 companies. The Attorney General's Office previously
said the number of debtors was 28.

Four of the 24 companies are now under intensive investigation
by the office. They include PT Lativi Media Karya (LMK), and PT
Siak Zamrud Pusaka (SZP). The office declined to give the names
of the two other firms.

According to the BPK report, Bank Mandiri had provided credit
facilities to ineligible companies.

The alleged corruption at Bank Mandiri highlights how old
habits die hard in the Indonesian banking sector, which plunged
into near collapse during the late 1990s financial crisis partly
due to poor lending practices. The banking crisis had forced tax
payers to cover the cost of the multi-billion dollar bank bailout
program launched by the government in the wake of the crisis.

The Attorney General's Office, which is under pressure to
thoroughly investigate the case as the public has high hopes that
the current government will seriously curb the rampant corruption
in this country, aims to look into the possibility that bank
officials received bribes from debtor companies seeking
preferential treatment.

Soehandojo said it was also possible for the Attorney
General's Office to question Lativi's owner Abdul Latief (a
minister during the administration of president Soeharto) and
Bank Mandiri's president director E.C.W. Neloe.

"Of course we will call them (Neloe and Latief), if one of the
witnesses points out that they are involved in this case," he
added.

Elsewhere, Soehandojo said that the Attorney General's Office
had to delay the questioning of two former Bank Mandiri officials
identified as AMW (now working at Bank Permata) and SPM (now at
Bank Negara Indonesia) because they were still on an overseas
trip.

The office has previously questioned four Bank Mandiri
directors as witnesses. They are MST (director of corporate
banking), WAM (director of risk management), KL (director of
finance and strategy) and OSA (director of consumer banking).

Soehandojo also added that the office would conduct an
investigation at Bank Mandiri's headquarters on Monday and would
also seize documents related to the credit facilities given to
the 24 companies.

"The team is also assigned to list all the assets of the 24
companies," he said.