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)