Former top govt officials named in loan scam report
JAKARTA (JP): The House of Representatives concluded on Tuesday there was the possibility former president Soeharto, his associates and former top government officials were involved in a multibillion dollar scam involving Bank Indonesia liquidity support to ailing banks.
Head of the House Special Investigating Team Sukowalujo Mintohardjo named former coordinating minister for the economy, finance and industry Ginandjar Kartasasmita, former finance ministers Mar'ie Muhammad, Fuad Bawazir and Bambang Subianto as well as Bank Indonesia Governor Sjahril Sabirin and his predecessor Soedrajad Djiwandono among those implicated.
"We found indications of abuse in the channeling of the funds," Sukowalujo told a news conference for the announcement of the findings.
The team recommended that the attorney general follow up on the House's findings.
The team also implicated the owners of several recipient banks in the loan abuse, including Soeharto's children.
Soeharto associates implicated in the scam are Mohamad "Bob" Hasan, former owner of the now defunct Bank Umum Nasional, and Anthony Salim, a former owner of BCA.
The team also identified Bank Indonesia's deputy governors Miranda Gultom and Aulia Pohan among the officials who should be investigated further.
Sukowalujo did not elaborate on the role officials might have played in collusion which could have led to the misuse of Rp 80 trillion in emergency liquidity support.
However, he said it might have been caused by a lack of coordination between the central bank as the fund provider and the Ministry of Finance as the supervisor.
"The fund channeling and supervision either went wrong, or there was political interference, which meant an abuse of power."
The bank liquidity support policy was launched in September 1997 when confidence in the country's banking system plunged due to the economic crisis.
Bank Indonesia channeled Rp 164 trillion (US$23 billion) as of January 1999 to ailing banks, of which Rp 80 trillion was believed to have been misused.
The team provided a chronological breakdown of the findings from its more than one-month investigation. It spanned the period shortly before the economic crisis hit Indonesia in July 1997, after the crisis started to affect banks, which led to the liquidity support decision and the government blanket guarantee program in January 1998, and after the central bank began to channel its liquidity support funds through January 1999.
Suko said several banks already showed negative balance sheets before the crisis, but they were not suspended from interbank clearing transactions.
During the crisis, the rupiah depreciated sharply against the U.S. dollar while bank interest rates soared, with the government applying a tight money policy, Suko said.
"Money was scarce and banks rushed to the central bank to obtain emergency liquidity support."
Furthermore, he said, when the government closed 16 banks in November 1997, the public lost confidence in domestic banks and began to withdraw deposits.
During the four months between the announcement of the government blanket guarantee program in January 1998 and May 1998, the team noted a sharp increase in the amount of liquidity funds channeled, from Rp 47 trillion to Rp 119 trillion.
He said the amount of liquidity funds mounted until it reached its cumulative present figure of Rp 164 trillion.
The team recommended that the government review its current blanket guarantee for bank deposits and claims, and prepare the establishment of a deposit insurance body to cover the risk of bank closures. (bkm)