Government assesses 'power' to nail corrupt tycoons

Government assesses 'power' to nail corrupt tycoons

JAKARTA (JP): Finance minister Bambang Sudibyo said on
Wednesday the three-month old government was still assessing
whether it had the "real political power" to put behind bars the
"powerful" businessmen responsible for creating the messy banking
sector and burdening tax payers.

Bambang said there were high expectations the planned
investigative audit on the alleged abuse of the multibillion
dollar government bailout money for ailing banks between 1997 and
1998 would lead to the jailing of the culprits.

"But in reality, if you want to nail someone you must be more
powerful than the one you're trying to catch," he told the House
of Representatives commission IX on state budget and banking
during a hearing session.

"The (recent) democratic general election has come up with a
legitimate government. But did this process also provide real
power? Has the balance of power shifted (to the new regime)?" he
said.

"We don't know this yet. This is still being measured and
calculated," Bambang said.

"Legitimacy is just one source of power. Money, weapons and
experience ... can also create power," he said, comparing the
power of President Abdurrahman Wahid's administration formed last
year through the country's most democratic election in decades
with that of the powerful businessmen who had colluded with the
32-year old Soeharto regime.

The Abdurrahman administration is also under strong pressure
to resolve various problems inherited from the previous
government, including separatists demands, sectarian clashes and
human rights violations by the powerful Indonesian Military
(TNI).

Bambang was responding to demands from legislators that the
government act firmly in dealing with bad bankers who had abused
the government's bank liquidity support.

The government, through the central bank, injected some Rp
164.5 trillion (US$22.46 billion) in liquidity support between
late 1997 and 1998 to help ailing banks stay afloat at the height
of the economic crisis.

But a recent general audit on Bank Indonesia's balance sheet
as of May, 1999, by the Supreme Audit Agency (BPK) showed that
more than Rp 80 trillion of the liquidity support had been
improperly injected.

Many have suspected that bad bank owners abused the liquidity
support to speculate on the foreign exchange market amid the
rupiah's meltdown in 1998.

BPK has just started its investigative audit on the possible
abuse of the liquidity support. The agency plans to investigate
both Bank Indonesia and the recipient banks.

The audit agency will be assisted by the Attorney General's
Office, which will conduct a legal audit.

Audit agency chief Satrio B. Yudono said recently he expected
the audit to be completed in six months time.

Meanwhile, head of the House commission IX Sukuwalujo
Mintoharjo said the commission would summon former finance
ministers Fuad Bawazier, Bambang Subianto and Mar'ie Muhamad and
former Bank Indonesia governor Sudradjat Djiwandono for
questioning over the bank liquidity support policy.

Sukowalujo said the commission would also summon former bank
owners, including Anthony Salim (former owner of Bank BCA),
Sjamsul Nursalim (Bank BDNI), Mohamad Bob Hasan (Bank BUN) and
Usman Admadjaja (Bank Danamon).

The four banks were the largest recipients of liquidity
support, totaling Rp 100 trillion. Bank BDNI and Bank BUN have
been closed down, while the other two banks have been
nationalized.

The former bank owners have also developed other large
businesses, allegedly by abusing their banks' deposits and
government connections.

The government has thus far issued bonds worth Rp 164.5
trillion to the central bank to cover for the liquidity support.

Meanwhile, deputy chairman of the Indonesian Bank
Restructuring Agency (IBRA) Arwin Rasyid said the agency expected
to be able to recover some Rp 120 trillion from the collaterals
(assets) surrendered by the owners of the recipient banks.

Bank Indonesia governor Sjahril Sabirin has said liquidity
support was an inevitable contingency measure to prevent the
domestic banking system from a complete breakdown.

Sjahril pointed out liquidity support had to be injected into
banks facing massive runs from nervous depositors at a time when
confidence in the industry was at its nadir. (rei)