BI Governor's conviction

The Central Jakarta District Court's sentencing of Bank Indonesia's Governor Sjahril Sabirin to three years in jail for his involvement in the 1999 Bank Bali scandal surprised most lawyers and analysts, who had expected his acquittal after three principal defendants in the same corruption case had earlier been judged as innocent.

As Sjahril has decided to appeal, we should let the higher court or the Supreme Court make a final legal decision on that matter, a process that may take until the central bank governor officially ends his five-year term in March, 2003.

The verdict should be welcomed as evidence of a more concerted effort by the government to combat corruption. But the decision raised questions as to why Sjahril was convicted while the persons who were primarily responsible for and were the main conspirators in the crime were declared innocent.

We are also troubled by the inconsistencies in the judgment and the discriminatory manner in which the Attorney General's Office prosecuted those suspected of involvement in the scandal.

Sjahrir was found guilty of corruption, as he approved Bank Bali's claims for Rp 905 billion (US$80 million based on the rupiah rate in mid-1999) in inter-bank claims in violation of prudential banking regulations. However, three main defendants -- Rudy Ramli, Pande Lubis and Djoko Tjandra -- were acquitted because the judges decided that because the Bank Bali scandal caused no losses to the state, it could not be classified as corruption.

If breaches of prudential banking rules were the main reasons that led to Sjahril's conviction, then justice is not blind here, because the decision to pay Bank Bali's claims went through a multistep process involving then minister of finance Bambang Subianto, deputy chairmen of the Indonesian Bank Restructuring Agency (IBRA) Farid Harianto and Pande Lubis and several directors at the central bank.

The Bank Bali scandal was indeed a classic case of corruption and patronage politics within the government, which has been assessed as one of the most corrupt in the world.

A special investigation of the scandal conducted by PricewaterhouseCoopers at the request of then IBRA chairman Glenn Yusuf and the Supreme Audit Agency in late 1999 uncovered numerous indications of fraud, noncompliance, irregularity, misappropriation, undue preferential treatment, concealment, bribery and corruption during the processing and payment of Bank Bali's claims.

PwC discovered, with the support of more than 37 documents as exhibits to validate its findings, that Bank Bali's claims, which had been rejected as ineligible for payment under the blanket guarantee scheme by IBRA and the central bank, suddenly gained special attention from both institutions in February, 1999 .

The claims were not only reexamined by both institutions soon after Rudy Ramli hired PT Era Giat Prima, a company owned by leaders and supporters of the Golkar party, as a broker to collect the loans. The joint ruling of the minister of finance and the central bank on the requirements for claims to be paid were suddenly amended in May, 1999 to make the Bank Bali claims eligible for payment.

The PwC report describes a flurry of meetings between then minister of finance Bambang, Rudy, PT Era Giat Prima's directors Djoko Chandra and Setya Novanto, Golkar leader A. Baramuli, IBRA deputy chairman Pande Lubis, minister of state enterprises Tanri Abeng and several other Golkar executives between February and May, 1999, discussing the processing of Bank Bali's claims. Yet the report mentioned only one such meeting at which Sjahril was present.

The investigations also discovered how almost all the senior officials involved in the processing of the claims had actually known of the "cessie" (debt collection) agreement between Bank Bali and Era Giat Prima.

The debt collection service was unnecessary because if the claims did not meet the requirements set by the minister of finance and the central bank, nobody could have made them valid anyway.

But the fact was that it was only after the signing of the agreement, Bank Bali's claims were reviewed and made valid and eligible for payment after both the minister of finance and the central bank amended their joint ruling on the requirements.

PwC also discovered how numerous transfers of funds suddenly flowed out of Era Giat Prima's and Djoko's accounts, immediately after Bank Bali paid Rp 546 billion in broker's fees to the accounts of a number of Golkar leaders and many other senior government officials and businessmen affiliated with the Golkar party. These transactions involved techniques commonly associated with money laundering, such as currency swaps, foreign exchange deals and cash withdrawals.

But then attorney general Marzuki Darusman, himself a Golkar leader, did not make any effort to follow the money and uncover the whole truth about the scandal.

The report describes how IBRA deputy chairman Pande Lubis and Bank Indonesia's director and deputy director for banking development division Erman Munzir and Dragono Lisan seemed to be the most responsible for verifying and processing the claims. Yet only Lubis has thus far been brought to court, and was eventually declared innocent.

Sjahril's conviction will therefore not help to improve the public's confidence in the government's credibility and resoluteness in law enforcement, notably in the fight against corruption, if others strongly suspected of involvement in the Bank Bali scandal are not prosecuted.