Fri, 05 Dec 2003

BRI tried to cover up scam: AGO

Abdul Khalik, The Jakarta Post, Jakarta

The Attorney General's Office (AGO) said on Thursday that the management of state-owned Bank Rakyat Indonesia (BRI) tried to keep the Rp 294 billion (US$34.5 million) loan fraud a secret when prosecutors investigated the case in October.

AGO Public Relations head Kemas Yahya Rahman said following a tip from the public, the Jakarta Prosecutor's Office (JPO) investigated the case in October, but the BRI management had tried to cover up the scam.

"The case was uncovered purely due to the JPO's investigation, which was prompted by a report from the public. It was in no way the result of an initiative taken by the BRI management. They had even tried to obstruct the investigation. Only when we obtained valid information from other sources and detained the three branch heads, did we receive any cooperation from the BRI management," said Kemas.

He stressed that the BRI management filed a formal report on the scandal with the AGO after it became clear that it was useless to cover up the matter.

The fraud began when the East Kalimantan Development Bank (BPD Kalimantan) ordered in September the transfer of hundreds of billions of rupiah to a deposit account at the BRI Senen branch, Central Jakarta. On the same day, BPD Kalimantan ordered the branch to move the money to an account belonging to PT Delta Makmur Experindo. The branch head followed the order without carrying out any procedural checks.

The transfer order, at a staggering Rp 115 billion plus US$3 million, turned out to be fictitious.

PT Delta Makmur Experindo is owned by Yudi Kartolo and Hartono, who have been summoned twice by the prosecutor's office, but they have not responded.

Yudi is believed to be an old hand in orchestrating banking fraud, because of his alleged involvement in the Rp 1.1 trillion fraud at Bank Negara Indonesia (BNI) in 2001.

"We can't arrest them yet, because we have only summoned them twice. We must wait until the third summons has been delivered; then we can arrest them if they don't appear. However, we will keep on trying to locate them," said Kemas.

The scams at BRI Tanah Abang, West Jakarta, and at BRI Surya Kencana, Bogor, were carried out by the same company, but used a different method.

In them, PT Delta Makmur Experindo requested loans with time deposits as collateral. The heads of both branches approved the loans without verifying the collateral with the time deposit holder.

The time deposit holder has denied that he permitted his deposits to be used as collateral in the loans.

The lending scam at the Tanah Abang branch reached Rp 10 billion and at Surya Kencana, Rp 93.5 billion.

"The manner in which the scam was carried out shows not only that the branch heads failed to do their jobs, but also that they were key players in the fraud. We detained Deden Gumilar of the Senen branch on Nov. 3, Asep Tarwan of Surya Kencana on Nov. 13 and Agus Riyanto of Tanah Abang on Nov. 20. They are still in custody," said Kemas.

The AGO has questioned 20 witnesses and frozen the 29 accounts into which the money has been channeled. The combined balance of the accounts totals Rp 90 billion.

The fraud underscores the weak internal control in state-owned banks.

This is the second fraud case reported in the last three months, following the revelation of a massive Rp 1.7 trillion lending scam at BNI in October.

Many banking analysts are worried that the two scandals are only the tip of the iceberg in Indonesia's banking system.