BPK says new govt can reopen banking scandals

BPK says new govt can reopen banking scandals

Zakki P. Hakim, Jakarta

The Supreme Audit Agency (BPK) is conducting an audit into a
government policy that allows former bank owners to escape
prosecution over misused liquidity aid, in a move that may pave
the way for the next government to reopen the mass corruption
case.

BPK chief Satrio "Billy" Joedono told the press on Friday that
results of the audit, expected to be completed before the next
government takes office in October, might contradict official
policy of the now-defunct Indonesian Bank Restructuring Agency
(IBRA).

"If so, it is up to the government whether or not to follow up
on our findings," he said.

Billy was commenting in response to Thursday's announcement by
the Attorney General's Office that it had halted its
investigation into Sjamsul Nursalim, a corruption suspect.

The former owner of Bank Dagang Nasional Indonesia was issued
debt-free status, with IBRA confirming that he had fully repaid
his firms' Rp 10.1 trillion (about US$1.12 billion) BLBI debt.

IBRA has so far issued debt-free status to 14 former bank
owners (not eight, as reported on Friday).

IBRA was set up by the government during the late-1990s
economic crisis to help restructure the banking industry,
including facilitating the disbursement of Rp 144.5 trillion in
Bank Indonesia liquidity support (BLBI) funds for ailing banks.

However, many bank owners abused the government loan by
channeling them for an alternative use, including speculation,
causing massive losses in defaulted loans. The bankers also
violated banking regulations by channeling most of the banks
money to affiliated businesses.

After years of fruitless efforts to reclaim the funds, the
government proposed not to pursue criminal charges against the
ex-bankers, if they repaid their debts in either cash, assets or
a combination of the two.

In 2002, the government issued Presidential Decree No. 8 to
implement the policy, which has raised much controversy and
strong criticism among the public.

However, several experts have said the assets surrendered as
debt repayment had a much lower market value than that claimed by
ex-bankers -- leaving taxpayers to cover the difference.

The BPK audit will determine whether the surrendered assets
had been sufficient to cover the debts of the ex-bankers, many of
whom are well-connected businessmen of the Soeharto regime.

Billy said the BPK would announce its conclusions on whether
Sjamsul and others had earned the debt-free status after the
audit was complete.

"The Attorney General's Office can reopen a case whenever new
evidence comes to light," said Teten Masduki of the Indonesian
Corruption Watch.

He said that findings from the BPK audit could be useful in
pressuring the next government to reopen the corruption case of
"bad bankers".

Teten added that if the government refused to do so, the
matter could be taken to the Corruption Eradication Commission.