BI comments on HongkongBank fraud

BI comments on HongkongBank fraud

JAKARTA (JP): After being silent for weeks, Bank Indonesia,
the central bank, finally issued a statement yesterday on the
alleged fraud involving Rp 79 billion (US$34.5 million), which
hit HongkongBank's branch office here recently.

Paul Sutopo, the managing director of the central bank, said
that some of the transfer orders sent to HongkongBank from three
European banks have been found to be fake.

The validity of other orders are being assessed, he said,
indicating the possibility that not all the suspicious transfer
orders sent to HongkongBank were counterfeit.

"Some of the transfer orders are fake while the others are
being investigated," he told Commission VII of the House of
Representatives in a hearing.

Answering commission members' questions about the alleged
fraud, which hit HongkongBank early this month, Paul said that
the money transferred could have been in either rupiah or foreign
currencies.

"If the transfer orders were real, HongkongBank would be able
to recoup the funds which have been transferred from the three
European banks," he said. "It means that there will be no fraud
involved."

Asked if the alleged fraud involved a money laundering
practice, Paul replied that such an allegation should be traced
from the sources of the funds in the three European banks.

He said the alleged fraud most probably occurred due to the
weakness of the internal auditing of HongkongBank because, based
on a preliminary assessment, the clearing and settlement of the
transfer orders in the local banks met all the standard
procedures.

The police are also still investigating the alleged fraud,
which has caused losses of about Rp 79 billion from HongkongBank.

According to the police investigation, HongkongBank received,
in late December, fake orders sent from Agro Impact, an Italian
company, through Union Bank of Switzerland, Swiss Bank
Corporation of Zurich and Dresden Bank of Germany to transfer a
sum of Rp 165 billion to two local companies.

The transfer orders worth Rp 50 billion from Union Bank and Rp
18 billion from Dresden Bank were rejected while the other orders
were accepted.

According to earlier reports, Henri O. Vendidjo, from the
Philippines, is believed to be the main suspect of the alleged
fraud. It is thought he had successfully withdrawn Rp 79 billion
from Modern Bank, through which the HongkongBank had transferred
the money to the beneficiary of the orders sent by the three
European banks.

He is still at large. Another suspect, Hans Wowor, was
arrested when he was about to withdraw Rp 18 billion from
Unibank, another local bank. (hen)