BI blames BNI board over loan scandal
Dadan Wijaksana, The Jakarta Post, Jakarta
The central bank faulted the directors of Bank BNI over its huge loan scandal as they had failed to act on an internal audit, which had reported something amiss long before the scam eventually became public knowledge.
Had the bank followed up on its own audit, it might have reduced the potential losses resulting from the scandal, Bank Indonesia senior deputy governor Anwar Nasution said on Thursday.
"...There was an internal audit carried out in BNI in early 2003, which stated suspicions over the those fictitious transactions. This was reported to the board of directors, but there was no follow-up.
"Why didn't they do something about it? This is negligence, which could put them (directors) at risk of being fined or suffering other punishments," Anwar told reporters, adding that the central bank had sent a letter to BNI asking for explanations.
He said that if the BNI directors failed to properly respond to it or gave unsatisfactory answers, they could face up to Rp 60 million (US$7,100) each in fines.
Anwar's statement adds to the pressure for BNI's directors to be held responsible for the Rp 1.7 trillion loan scandal.
The loans were disbursed between July 2002 and July 2003, and started when BNI's Kebayoran branch issued export credits to some exporters without first conducting sound appraisals.
The exporters -- claiming to be exporting certain products to the Congo and Kenya -- used as their credit collateral letters of credit (L/Cs) guaranteed by questionable banks in Switzerland, Kenya and the Cook Islands. The banks were not even BNI correspondent banks.
The exports in question never took place.
While currently two of the bank's officials have been taken into police custody, along with six suspects deemed to have received the funds, calls have been rising for BNI's board of directors to be dismissed.
Not only did they failed to ensure proper loan appraisal mechanisms in the bank, they had also the moral obligation as leaders to take the blame for the mistakes committed by their subordinates.
Elsewhere, Anwar said he expected to receive a response soon from BNI regarding the central bank's letter, saying that fines would be the least they would have to worry about if found guilty of negligence.
"If found guilty, it will not be just fines that they will receive. There will also be a fit and proper test by Bank Indonesia, and those who are found guilty could receive severe punishments, such as a ban from working in the banking industry," Anwar stressed.
Meanwhile, the National Police have so far questioned 21 witnesses, 16 of whom are BNI employees, two people are from private companies, and three others from related banks.
It has also blocked 29 bank accounts belonging to companies and individuals linked to the scandal, while confiscating $238,000 in cash and related documents.