Sat, 12 Feb 2000

Cut of liquidity support loans

Businessman Probosutedjo was quoted in a Jakarta newspaper on Feb. 8 as saying that he did not want to receive Bank Indonesia liquidity support loans because the bank would take a cut of up to 25 percent. It is up to the House of Representatives and law enforcers to check the veracity of this statement and to take follow-up steps if necessary.

If Bank Indonesia officials did take a 25 percent cut of liquidity support loans, it means that 25 percent of the total Rp 164 trillion in loans, or Rp 41 trillion, evaporated. Where could that money have gone? Bank Indonesia officials, directors of related banks, finance ministry authorities, powerholders and their cronies?

On the other hand, if Probosutedjo's statement is not based on adequate evidence, I recommend that Bank Indonesia officials demand Probosutedjo withdraw his statement on threat of bringing him to court.

Perhaps a cross-check of the audit of one of the bigger banks, e.g. Bank Danamon, by the Supreme Audit Agency can be done to find where the liquidity support loans went. Were they used effectively? The money could have been made to disappear in a very sophisticated way and only experts will be able to detect the irregularities.

Members of the House of Representatives should not ignore Probosutedjo's statement and work to discover the truth, because Bank Indonesia liquidity support loans have become a great disaster for Indonesia.