Former bank directors held for corruption
JAKARTA (JP): Six businessmen were arrested for alleged involvement in corruption related to the issuance of commercial papers and bad credits at Bank Arta Prima in Jakarta, police said yesterday.
City Police Chief Maj. Gen. Hamami Nata said the men were involved in a scam worth Rp 1.2 trillion (US$516 million) consisting of Rp 324 billion of commercial papers underwritten by Bank Arta Prima and Rp 700 billion in bad credits.
The bank was a subsidiary of Gunung Agung, a widely- diversified business group of book publishing, a bookstore chain and other businesses.
"At least 30 commercial papers worth Rp 324 billion which were endorsed by Bank Arta Prima have been sold to the public," Hamami said.
Hamami said the bank had issued the commercial papers without approval from Bank Indonesia. Five papers were seized as evidence.
"So far, there has not been any indication of involvement of Bank Indonesia's employees in the case," Hamami said.
They were identified under the initials CA, HA, and MM, respectively the former president, director and commissioner of Bank Arta Prima. Another was HL, a former manager of the Gunung Agung group.
Former commissioner of the Gunung Agung group, Made Oka Masagung and businessman, Kim Johannes, have been banned from leaving the country since May 7.
Hamami said Kim was believed to be the mastermind behind the crime.
City Police Chief of Detectives Col. Gories Mere said the men were charged with violating article 49 of the 1992 Banking Law. If found guilty, they could face a 15-year jail term and a Rp 1 billion fine.
The article governs crimes related to falsifying records, documents, transactions and other legal reports related to a bank's operations.
He said the men were involved in a conspiracy to withdraw funds from Arta Prima through group-related credits in excess of the central bank-mandated legal lending limits.
The Gunung Agung group has many subsidiaries, including Bank Arta Prima and 30 companies, Gories said.
"In an attempt to circumvent the legal lending limits, they extended credits to a company not related to the Gunung Agung group," Gories said.
But the borrower, which Gories calls company "X", was used as a conduit to funnel loans from Bank Arta Prima to other Gunung Agung subsidiaries.
But company "X" later defaulted on the loans mounting to as much as Rp 700 billion because the Gunung Agung subsidiaries which used the credits failed to pay back the loans.
Gories said police had so far questioned 10 witnesses, including the bank's employees, former executives and banking experts.
He said a police investigation into the case was based on a report from Bank Arta Prima's new management.
The immigration's control and supervision department had banned Made Oka and Kim from going overseas following a request from the City Police's Directorate of Detectives.
Both men were earlier charged with violating Law No.3/1971 on corruption, the Criminal Code's article 263 on counterfeiting, article 378 on cheating, and article 56 on conspiracy.
Kim had been questioned at the Attorney General's Office several years ago in a case on tax manipulation related to the refund of value added tax on exports.
Kim's investigations were later stopped due to the lack of evidence. (cst)