Frustration escalates as Bank Bali scandal drags on

By Reiner S

JAKARTA (JP): The villains in the Bank Bali saga are fighting back with a vengeance, armed with the considerable might at their disposal.

And so far they appear to be winning.

Encouraging signs earlier in the month from the House of Representatives that evidence against politically influential figures implicated in the scandal would be revealed soon were dashed with developments last week.

Legislators suddenly appeared impotent and incapable in pushing through the investigation to its conclusion. The findings of an expensive audit into a scandal which began with the payment of a dubious commission were given short shrift.

Some legislators are not hiding their frustration.

"I have a feeling, a political one, that this commission will never succeed (in uncovering the scandal)," said legislator A. Muchlis over the weekend during a hearing between House Commission VIII concerning banking and finance with international auditor PricewaterhouseCoopers (PwC), which conducted the audit.

House special investigation team deputy Erwin Sjahrir told of feeling let down after a key witness denied the veracity of a major section of a journal purportedly listing meetings of the bank's management with influential figures from business and politics.

"I'm now confused," he said after the closed-door questioning of former Bank Bali director Firman Soetjahja.

Former Bank Bali president Rudy Ramli acknowledged the existence of the journal to Commission VIII on Sept. 10. The journal, widely circulated to the media, lists Firman meeting with the head of the Supreme Advisory Council (DPA) Arnold Baramuli and other influential figures in February.

Rudy's startling testimony fanned hopes it would mark the turning point in revealing the suspected role of Baramuli and other powerful figures.

Finance minister Bambang Subianto and chairman of the Indonesian Bank Restructuring Agency (IBRA) Glenn S. Yusuf also indicated to the same commission on Sept. 13 that Baramuli's was involved.

Baramuli is President B.J. Habibie's chief adviser.

Both Bambang and Glenn were later summoned to Habibie's private residence. Rumor has it that Habibie was set to fire the two, based on Baramuli's advice, but relented after the International Monetary Fund (IMF) intervened.

Baramuli repeated on Friday that he was not involved in the scandal and cited Firman's testimony as proof.

He also took the opportunity to brand Rudy a liar and a drug addict.

"It's clear that Bambang and Glenn should be responsible for the Bank Bali problem," he told more than 100 journalists and observers at a news conference after the questioning.

He claimed the scandal was due to the payment of government guaranteed interbank loans to the bank, alleging that the PwC audit revealed wrongdoing committed by Bank Indonesia (BI) and IBRA, a unit of the finance ministry.

"In our opinion, BI and IBRA did not fully comply with the existing government guarantee scheme rules and regulations in processing Bank Bali's claim," PwC said in its summary report.

The police announced on Thursday that IBRA's deputy chairman Farid Harianto was listed as a suspect. They also named two BI senior officials, Herman Munzir and Demi Demas, as suspects on Friday.

Legislators were dismayed that PwC's expensive audit was ultimately of no help because the complete report could not be provided to them based on government regulations.

"It's useless because the results can't be given to us," said Muchlis.

Legislators received the summary of the PwC report but the flow of funds report -- vital in revealing those involved in the scandal -- was not included.

According to the law covering the BPK, the full PwC audit report can only be provided to the police and the attorney general. PwC excluded the section on the flow of funds due to fears of violating the bank secrecy rules.

Legal experts argued that the commission should not have summoned PwC in a vain effort to obtain the full report, but instead requested it from the police.

"I don't understand why the commission should have wasted its time by summoning PwC. They should have been more strategic and creative," said one legal consultant.

The scandal centers on the transfer of a Rp 546 billion commission from the bank to PT Era Giat Prima (EGP) as payment for its help in recouping about Rp 904 billion in loans to closed banks.

Bank Bali did not need the help of a third party because the claims were guaranteed by the government.

There have been allegations that EGP, which was headed by a Golkar Party executive, was a front for Habibie's inner circle to raise funds to bankroll his bid for the presidency in November.

PwC acknowledged that its fund tracing activities were incomplete due to time limitations and the restrictions imposed by the central bank on its auditing of certain bank accounts.

It recommended that the police continue to investigate the tracing of funds.

Many doubt that the police would be able to do the job swiftly and satisfactorily.

"The police have not been proactive. They're only proactive against the enemies of Habibie," said Faisal Basri, secretary general of the National Mandate Party.

Police have named former members of Bank Bali's management, owners of EGP, IBRA officials and BI officials on the list of 11 suspects.

Several opposition politicians have warned of imminent mass demonstrations due to the slow progress in the resolution of the scandal.

Habibie has appealed to the public to be "proportional" concerning the scandal, arguing that it was up to law enforcement officials, particularly the police and the attorney general, to resolve the matter.

But his plaintive request may be disregarded if the wide- ranging implications of the scandal begin to touch the lives of ordinary Indonesians, particularly the poor. The IMF and the World Bank are threatening to withold further aid disbursements pending satisfactory resolution of the scandal.