Bapindo trial exposes weaknesses in procedures

Bapindo trial exposes weaknesses in procedures

JAKARTA (JP): A former director of Bank Pembangunan Indonesia
(Bapindo) acknowledged yesterday that a number of their decision
making processes were frought with flaws, thus exposing it to a
major scam last year.

Towil Heryoto in a court testimony yesterday said that a
meeting of the board of directors produced an agreement to
disburse huge loans to businessman Eddy Tansil without bothering
to check some of the finer details.

Tansil, who is already in jail in connection with the Rp 1.3
trillion ($620 million) scam, cashed in on his Bapindo loans
without ever signing a single contract for the loans.

Towil confessed in the trial of a fellow former director
Subekti Ismaun at the South Jakarta district court yesterday that
some of the board of directors meetings were often treated as a
mere formality and that the members assumed that the finer
details had been taken care of by the staff.

In the case of Tansil's loans, "we did not wait for the loan
agreements to arrive since they could have taken a long time and
we did not want to make the clients wait," he said.

Towil and Subekti, two former directors, are being charged
separately for allowing the Bapindo debacle to occur.

Tansil, the owner of the Golden Key Group, is now serving a
17-year jail term and has been ordered to pay Rp 500 billion in
restitution fees. The deputy manager of Bapindo's Jakarta branch,
who personally handled Tansil's account, has been convicted and
sentenced to nine years imprisonment.

Tansil obtained the loans from Bapindo between 1989 and 1993
and managed to personally cash in on most of them although the
credits were originally intended to pay for the equipment of a
petrochemical project he was building.

Towil told the court that the Bapindo Jakarta branch was
supposed to have taken care of the details of Tansil's loan
applications, including securing the credit agreement.

Formalities

Towil acknowledged that the loan agreements were signed only
early this year, or four years after they were approved by the
board of directors.

Judge Soedjatman, who presided at Subekti's trial, queried
whether the board of directors meetings were mere formalities.

Towil, in reply, simply admitted that the loans should never
have been approved in the absence of a credit agreement.

Two Bapindo staffers, Heru Santoso and Usman Boute, also
testified during the hearing yesterday.

Heru, who was one of the staff in Bapindo's head office,
confirmed that the board of directors held two separate meetings
on June 2 to discuss the future of Tansil's loans.

He said the afternoon meeting overruled the decision made in
the morning about cutting the bank's losses with Tansil's
dealings. Heru said there were no minutes of the meeting.

He also confirmed that three of the five directors were
present at the meeting, thus fulfilling the quorum. (02)