Bapindo bosses sacrificed banking principles: Witness
JAKARTA (JP): The directors of Bank Pembangunan Indonesia (Bapindo) sacrificed banking principles in 1989 when they extended loans to Golden Key Group because they wanted to help the company beat a deadline to win a project.
Achmad Marzuki, the acting president of the state bank, who was secretary to the board of directors in 1989, said during testimony at a court hearing yesterday that the directors ignored banking rules and principles in approving the loans.
Achmad was testifying in the trial of Sjahrizal, one of the bank's former directors who are being tried in connection with the Rp 1.3 trillion ($620 million) loan scandal at Bapindo.
He is being held responsible, individually and collectively with other Bapindo directors, for the debacle that nearly bankrupted the bank.
"The previous Bapindo directors gave priority to the Golden Key Group's project financing," he told the Central Jakarta District Court.
He cited as an example the fact that the board of directors approved the opening of letters of credit for the Golden Key Group in September 1989 because the company had to meet a deadline set by Monsanto Lumus of the United States, the license holder for the petrochemical projects it planned to build.
The American company had threatened to cancel its licensing agreement if the Golden Key Group could not get the credit approval from the state-owned bank by the end of the month.
Achmad said that the directors did not insist on Eddy Tansil, the owner of Golden Key Group, signing a contract loan agreement, which is standard practice for every loan applicant.
Such a contract had not even been signed by the time the loan scandal became public this February.
Converted
Achmad said the directors were also aware of the high risk when they converted the terms of the letters of credit for Tansil from usance to red clause.
The conversion allowed Tansil to personally cash in on his Bapindo loans rather than his suppliers as originally intended.
Achmad's testimony strengthened the government prosecutors' case against Sjahrizal and three other former Bapindo directors who are being tried in connection with the scandal.
All four of them have been insisting that they had no real control over the way the loans were extended and disbursed to Tansil.
On the one hand, they said they were pressured by two cabinet ministers to extend the loans and on the other, they blamed Maman Suparman, the deputy manager of Bapindo's Jakarta branch for most of the conversion of the terms of the loans.
The other three former Bapindo directors on trial are Subekti Ismaun, Towil Heryoto and Bambang Kuntjoro. They are all being tried separately.
Besides hearing Marzuki, the Central Jakarta District Court also heard the testimony of Subekti Ismaun, Adi Sugondho, another former director, as well as that of Apip Sjahabudin and Heru Santoso, two Bapindo staffers, yesterday.
Tansil has been convicted and sentenced to 17 years imprisonment. He was also ordered to pay Rp 500 billion ($238 million) in restitution. Maman was sentenced to nine years in jail. (02)