Calls rise for dismissal of BNI directors

Calls rise for dismissal of BNI directors

Damar Harsanto and Dadan Wijaksana, The Jakarta Post, Jakarta

Calls intensified on Friday for the board of directors of Bank
Negara Indonesia (BNI) to be held responsible for the recent loan
scam, with lawmakers being the latest to urge their dismissal.

The calls emerged during a closed-door hearing between the
state-owned bank's top executives and lawmakers from the House of
Representatives subcommission overseeing banking affairs, said
Anthony Zedra Abidin, who presided over the hearing.

"They gave disappointing answers to our questions. We feel
that they were irresponsible, tending to shift the responsibility
to the bank's Kebayoran Baru branch, where the fraud took place.

"We have asked them explicitly to resign, because the scam
exposes a disastrous weakness in BNI's internal control," Anthony
told reporters, adding that the recommendation for dismissal
would be submitted soon to the State Minister for State
Enterprises Laksamana Sukardi after first securing unanimous
approval from the subcommission.

Legislators grilled BNI's board of directors for over three
hours in regards the much-publicized Rp 1.7 trillion (US$201.18
million) lending scam.

Anthony added, "Although the (BNI) president admitted that he
felt guilty, ashamed and so on because of the scam, that's not
enough -- where does the responsibility lie?"

The scandal concerns the publicly listed bank's failure to
conduct a proper credit appraisal before allowing its Kebayoran
Baru branch to disburse export credits to a number of local
companies. The companies claimed to be exporting select
commodities to the Congo and Kenya in Africa.

The companies, identified by BNI as the Petindo Group and the
Gramarindo Group, used as collateral letters of credit guaranteed
by banks in Kenya, Switzerland and the Cook Islands.

The credits were valued at Rp 1.7 trillion and disbursed from
December 2002 to July 2003. However, it was later discovered that
the export activities had never materialized.

BNI president Saifuddien Hasan said on Thursday that the
debtors had tampered with the documents and had colluded with
certain BNI officials to obtain the loans.

Analysts have said that the bank should have smelled something
awry before the disbursements, as the foreign banks in the
letters of credit were not BNI correspondent banks. They also
demanded that the bank's top officials, instead of personnel in
the Kebayoran Baru branch, be held responsible, as such a large
amount of credits could never have been disbursed without
approval from the bank's headquarters.

Earlier reports said an extraordinary shareholders meeting is
scheduled for December, when one of the items on the agenda might
be the sacking of several BNI directors.

In the latest developments, police said on Friday they had
detained Jeffrey Basso, director of Gramarindo subsidiary PT Sri
Ranu Caraka Pasifik. Three people have now been arrested in
connection with the case.

Earlier this month, police detained Edy Santoso, head of the
foreign customer service division of BNI Kebayoran Baru in South
Jakarta, and Koesadiyono, head of BNI Kebayoran Baru.

"There are still eight other suspects on the loose," said
Brig. Gen. Samuel Ismoko, National Police detectives chief of
financial crimes, hinting that some of them had fled abroad.

The Police have named Maria Pauline Lumowa and Adrian
Waworuntu, owners of Gramarindo, as suspects, while the others
were identified only by their initials: AW of PT PK, TP of PT
BRP, APL of PT MUEI, JB of PT BM, RK of PT MT and AP of PT FM.