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.