Tue, 04 Sep 2001

City hall asked not to help Bank DKI

JAKARTA (JP): A non-governmental organization, the Jakarta Government Watch (JGW), urged the city administration on Monday to review a planned capital injection of Rp 80 billion (US$8.9 million) for city-owned Bank DKI before taking any stern actions against the bank's bad debtors.

"Sutiyoso should postpone the injection of the additional capital until firm measures are imposed on the bad debtors," JGW chairman Amir Hamzah said.

Without disclosing the amount of the bad debts, Amir argued that the loan disbursements to debtors were full of nuances of corruption and collusion.

He said most of the bank's debtors received the loans without pledging sufficient collateral since they were backed by unscrupulous city officials.

Based on an investigation conducted by the JGW, one of the debtors owed the bank more than Rp 100 billion for a loan it received in 1997 to build a hotel here.

"If the administration succeeds in pushing the debtor to pay his loan, then it will not need to inject more capital into the bank," Amir said. He would not disclose the name of the hotel.

He further said that the hotel owner had suffered losses and could not repay the loan because he was inexperienced at managing hotels.

He revealed that JGW had also found that Bank DKI suffered a loss of about Rp 19 billion in the purchase of mutual funds totaling Rp 27 billion in 1997, which are worth about Rp 8 billion.

"Based on the bad loans and the bank's poor performance, Sutiyoso should review the plan and improve control over bank management," he said.

Separately, the deputy governor for financial affairs, Fauzie Alvi Yasin, confirmed on Monday that the administration planned to add more capital taken from the 2001 city budget for bank recapitalization.

"It will be carried out by the end of this year at the latest," Fauzie said at City Hall.

He claimed the injection of Rp 80 billion, which would raise the bank's paid up capital to Rp 500 billion, was allocated in an effort to help revive the bank, which is under the supervision of the Indonesian Banking Restructuring Agency (IBRA).

Fauzie said the administration had made many efforts to help improve the bank's performance, including hiring professionals for the bank to handle its bad debts.

Meanwhile, the administration assistant for development affairs, Ongky Sukasah, said that some debtors had not returned their loans.

"Of course, we have some unpaid loans. Some of them are 'delinquent debtors'," he said, adding that most loans were disbursed over the past several years. (jun)