BI vows to solve Bank Arta Prima problem

JAKARTA (JP): Bank Indonesia Governor Soedradjad Djiwandono has vowed to solve all banking problems, including the recent Bank Arta Prima problem.

But he said not all banking problems could be solved quickly.

"Many will take a relatively long time to solve," he said after attending a ceremony to celebrate noted economist Sumitro Djojohadikusumo's 80th birthday here Friday night.

Soedradjad said the central bank would need time to solve the Bank Arta Prima problem. "We have to check its management, assets and shareholders, and this will surely take time," he said.

The problem, a promissory notes scam, came to light when the widely diversified Artha Graha group bought the bank on May 17 from PT Jagata Primabumi, which bought it from Gunung Agung Group.

Reports say that the Artha Graha group bought the bank through Bank Indonesia which had taken it over from PT Jagata Primabumi because of the promissory notes scam.

When buying Bank Arta Prima from Gunung Agung, PT Jagata had agreed to take over Gunung Agung's debts to the bank of Rp 187 billion and to other financial institutions of Rp 177 billion.

PT Jagata asked Gunung Agung to issue promissory notes (promes) worth Rp 324 billion to settle the debts.

Jagata failed to settle the promes.

The Artha Graha Group promised to inject fresh funds into the bank but refused to take over the promissory notes worth Rp 324 billion (US$94.3 million) although they were all underwritten by the bank.

Six businessmen were arrested recently by police for the scam. They included Made Oka Masagung, a former Gunung Agung majority shareholder, Kim Johannes Mulia, from PT Jagata, and former directors and commissioners of Bank Arta Prima.

Soedradjad said that as long as he was still governor, he would make an all out effort to solve all problems facing the Indonesian banking industry.

He complained that many people criticized the central bank without supporting facts.

"But there are many people who have confidence in the central bank. In fact, our banking conditions are better now than four years ago," he said.

Soedradjad, who is Soemitro's son-in-law, made a brief speech at the birthday party on behalf of family members.

Soemitro's birthday was on May 29. The party was postponed due to the general election.

The party was attended by about 200 people, including cultural observer Mochtar Loebis, former ministers of mines and energy Mohammad Sadli and Soebroto, economic adviser to the government, Widjojo Nitisastro, and a number of presidents of state-owned banks. (bnt)