BTN boss removed over Bapindo case

BTN boss removed over Bapindo case

JAKARTA (JP): Minister of Finance Mar'ie Muhammad has replaced
Sjahrizal, the president of the state-owned Bank Tabungan Negara
(BTN) and former president of Bank Pembangunan Indonesia, in
connection with the credit scandal at Bapindo.

F. Bambang Kuntjoro, a director at Bapindo, was also removed
on Saturday.

Agus Haryanto, a spokesman for the Ministry of Finance, said
the replacement of the two executives was made to facilitate
investigations by the Attorney General's Office on the fraud
involving the Golden Key Group.

He said that the finance minister had appointed Widigdo
Sukarman, the president of the state-owned Bank Papan Sejahtera,
as BTN's acting president.

Minister/State Secretary Moerdiono told newsmen Saturday that
President Soeharto fully supported the finance minister's
decision to replace Sjahrizal as BTN president.

"The finance minister sent a letter Thursday to the President
about Sjahrizal's replacement. The President's letter of approval
was delivered on Friday morning," Moerdiono told newsmen
following a meeting with Soeharto.

Sjahrizal was assigned as Bapindo's president in August of
1992 to replace Subekti Ismaun, who is now under the custody of
the Attorney General's Office, just before he was appointed as
BTN's president early this year. The minister swapped Sjahrizal's
position with that of Towil Heryoto, who is also in the custody
of the Attorney General's Office.

Towil, who is also a former director for credits at Bapindo,
was detained by the Attorney General's Office a day after his
replacement as Bapindo's president in the middle of last month.

Agus did not mention possible charges which could be imposed
on both Sjahrizal and Bambang in the alleged credit scam.

Eddy Tanzil, the chairman of the Golden Key Group who was the
credit recipient, and Maman Suparman the former deputy chief of
Bapindo's Jakarta branch office, are also being detained by the
Attorney General's Office for their alleged involvement in the
credit scam.

Officials

The credit fraud involves top government officials, former
Coordinating Minister of Political Affairs and Security Sudomo
and former finance minister J.B. Sumarlin.

Sudomo is now chairman of the Supreme Advisory Agency and
Sumarlin is now the chairman of the Supreme Audit Agency.

The two senior officials were widely reported to have
influenced Bapindo's executives in approving the credit facility
to the Golden Key group.

Sjahrizal tendered his resignation last Friday according to
informed sources. They also said that his information related to
the credit scam would be of great use to the Attorney General's
Office in outlining the possible involvement of the government's
senior officials.

Sjahrizal was reported to have opposed the $430 million credit
which was extended to the Golden Key Group when he was a director
in Bapindo.

When he was at the bank's helm, Sjahrizal extended the
maturity period of bank acceptances, the documentary credits
issued by Bapindo in financing the credit facility. Extending the
bank acceptances' maturity was essential as Bapindo did not have
enough money to repay its loans, they said.

Bapindo began issuing a usance letter of credits (L/C) to the
Golden Key Group in December 1989 for the procurement of
machinery and plant equipment for the business group's four
chemical projects in Serang, West Java. Later, the status of the
documentary credit facility was changed into a red clause L/C.
This allowed its beneficiary, a Hong Kong-based subsidiary of the
business group, to cash the funds even before the shipment of the
machinery and equipment.

The shipment of the business group's imports was never made
while the credit facility, which had grown to over US$430 million
since its first approval in December 1989, was left unpaid.

The total extent of the loan fraud, with interest, has caused
a loss to Bapindo to the tune of Rp 1.3 trillion ($620 million).

Serious

In another development Yahya Nasution, the vice chairman of
Commission VII of the House of Representatives (DPR), warned
Saturday that the government should pay serious attention to the
handling of the credit fraud in Bapindo.

Yahya said that his commission, which is in charge of
financial and trade affairs, has demanded that the government
conduct a fair investigation all officials involved in Bapindo's
credit fraud. He has also pushed the government to carry out
investigations of possible fraud taking place in other state
banks.

According to the government, bad debts recorded by the
country's banking industry (state and private banks) comprised
nearly 3.5 percent of all outstanding loans last November.
Banking analysts estimate that this number could now be as high
as 10 percent of outstanding loans, with the total sum of non-
performing loans (bad debts and doubtful loans) reaching over
14.97 trillion (US$7.12 billion.) Experts also estimate that the
percentage of non-performing loans in state-owned financial
institutions may be as high as 21.5 percent.

Yahya, a representative of the Indonesian Democratic Party
(PDI), said that Commission VII is determined to continue
investigating the non-performing loans in state banks.

It was Commission VII that first revealed Golden Key's credit
fraud nearly two months ago.

"The government should make a close examination of all debt
problems in state banks," Yahya said. He added that in the
upcoming hearings his commission would look into what action, if
any, had been taken by the government in settling the debt
problems.(hen)