Bank-related scandals remain unresolved

Bank-related scandals remain unresolved

Muninggar Sri Saraswati, The Jakarta Post, Jakarta

The state has suffered more than Rp 137 trillion (US$13.3
billion) due to the manipulation of the Bank Indonesia Liquidity
Support Fund (BLBI). Ironically, law enforcers have failed to
properly address the issue.

The fund misappropriation was first disclosed by the Supreme
Audit Agency (BPK) in May 1999.

The government provided liquidity support amounting to Rp
144.5 trillion from August 1997 to early 1999 to assist 48
commercial banks cope with the massive rush during the monetary
crisis. However, the audit agency revealed that 95 percent of the
troubled banks misappropriated the BLBI funds.

As often is the case, law enforcers were slow to follow up the
findings.

In December 1999 fire gutted part of the central bank
building, killing 15 people and destroying some of documents
related to the troubled banks.

The police suspected arson, but no thorough investigation was
conducted.

In October 2000 the Attorney General's Office announced that
it would send about 80 suspects, including central bank officials
and private bankers, to court.

But last year, former attorney general Marzuki Darusman
complained about the difficulties involved in prosecuting the
suspects due to the lack of data.

A spokesman at the office confirmed that two important
documents believed to have contained information that could help
reveal the violations of the central bank regulations in the
extending of emergency loans mysteriously disappeared.

Until today, there are only a dozen defendants who have been
indicted.

One of them, Hendrawan Haryono, former deputy director of the
now defunct Bank Aspac, was convicted last year, while the others
are still on trial. They are former Bank Indonesia directors and
others from Bank Dagang Nasional Indonesia, Bank Modern, Bank
Umum Servitia, Bank Umum Nasional, Bank Harapan Sentosa and Bank
Aspac, all of which have been closed.

Unfortunately, the government lost its first legal battle in
the case as the South Jakarta District Court acquitted Hendrawan
last year of corruption charges.

The defendant was instead found guilty of violating Article
49B of Banking Law No. 7/1992. He was sentenced to one year in
prison and ordered to pay a Rp 500 million fine or spend another
three months in jail, even though the bank had caused losses to
the state amounting to Rp 583.4 billion due to the misuse of the
emergency loan.

Limited data might be one of the reasons why the court failed
to sentence the defendant on corruption charges.

Another factor is that both judges and prosecutors who try the
cases have limited knowledge of the banking system and
regulations, let alone the details of the case.

For example, in the hearing of Kaharuddin Ongko, the former
director of Bank Umum National, earlier this month, they did not
ask the witness, former Bank Indonesia director Soedradjad
Djiwandono, about the alleged violations committed by the
defendant. Instead, they asked the witness, a professor at the
University of Indonesia, about the banking system and the flow of
the fund from the central bank to the commercial bank.

As a result, the hearing turned into a "lecture" on the
banking system.

A judge at the Central Jakarta District Court acknowledged his
lack of understanding of the BLBI case.

"Its not easy to understand but we have to," said the judge,
who asked not to be named.

Pradjoto, a banking legal expert, explained that the troubled
banks used the funds to speculate in the foreign currency market,
disbursed it to their own company groups or kept it for their own
interests.

"The judges and prosecutors should focus on these points. But
they would not do so unless they understood the root of the
problem," Pradjoto told The Jakarta Post.

According to Pradjoto, judges and prosecutors who do not have
proper knowledge of the issue could be easily fooled by defense
lawyers who would cunningly argue that the defendants were not
guilty because they only followed state policy on BLBI.

"State policy is one thing, but the misuse of the fund is
another. It is definitely a corruption crime since the defendants
used the fund, which is tax payers money, for their own
interests," he asserted.

Pradjoto urged judges and prosecutors to seek the advise of
experts to improve their knowledge so that the court would be
able to convict the defendants on corruption charges and order
them to return the fund.

Of course, that can only happen if members of the judiciary,
notorious for their depravity, are clean.

Otherwise, the state will lose again and will never be able to
regain the misappropriated fund.