Government faces mounting pressure to probe Bank Bali scam

JAKARTA (JP): The government is facing mounting pressure to thoroughly investigate the alleged high profile Bank Bali scandal amid signs of backing off.

Golkar deputy chairman Marzuki Darusman on Saturday warned the government against trying to cover up whoever was involved in the multimillion dollar affair.

"The public is already seeing attempts to cover up the officials involved in the case," Marzuki told reporters on the sidelines of a discussion on fighting corruption.

He explained that if the government failed to probe the Bank Bali scandal in a credible way, public confidence in the government and its policies would dwindle.

"We're very serious about fighting corruption whatever the risks to Golkar," he said.

Marzuki is regarded as a reformist politician in Golkar who is trying to distance the ruling party from past wrongdoings of the Soeharto (New Order) administration.

Marzuki has been appointed head of Golkar's investigation team for the Bank Bali affair, which allegedly involves several leaders of the party.

The Indonesian Bank Restructuring Agency (IBRA) confirmed on Friday earlier allegations made by banking law expert Pradjoto that Bank Bali paid Rp 546 billion (US$78 million) to private firm PT Era Giat Prima (EGP) for recouping Rp 904 billion in interbank claims on closed downs banks.

IBRA chairman Glenn S. Yusuf said the repayment of interbank claims on closed down banks need not use the services of any third party such as EGP, because the claims were insured by the agency through a government blanket guarantee program.

Reports say that Bank Bali used the services of EGP because the bank owner lost patience with IBRA after waiting for months for repayment.

EGP is a company owned by Setya Novanto, a vice treasurer of the ruling Golkar party, raising speculation that part of the fee was illegally used to finance the party's campaigning activities or for vote-buying during June's general election.

Setya acknowledged his company dealt with Bank Bali, but claimed that since EGP was a factoring company which buys out distressed loans it was a pure business deal.

But IBRA said the cession deal between Bank Bali and EGP was unusual as it did not involve upfront payment by EGP for Bank Bali's interbank loans.

Separately, former Bank Bali's commissioners (supervisors) J.B. Sumarlin and I.N. Suwandha, confirmed in a statement on Sunday that the bank's management, without consultation with the board of commissioners, signed on Jan. 11, 1999, a cession agreement with EGP.

Under the agreement Bank Bali ceded to EGP its interbank loans owed by several closed-down and taken-over banks and in turn EGP pledged to give the bank within three months securities whose value was equal to the amount of loans ceded.

The statement said the board of commissioners was notified on the agreement only in early April.

But since EGP failed to hand over the securities to Bank Bali within the allotted period, the board of commissioners recommended to the bank's board of directors to cancel the agreement, the statement added.

The bank's management nevertheless bowed to EGP's demand that the cession agreement be extended until June 11.

"We therefore conclude that there were irregularities in the agreement," added Sumarlin, a former minister, and Suwandha, who sat in the bank's board of commissioners until it was taken over by the central bank on July 23.

Pradjoto also claimed IBRA deputy chairman Pande Lubis and several other high-ranking government officials close to President B.J. Habibie were implicated in the scandal.

Marzuki demanded that government officials involved, including any senior officials at IBRA, be made nonactive to allow a thorough investigation into the matter.

"He (Pande) must be made nonactive as of Monday," he said.

In a related development, a senior official at the finance ministry was quoted by newspapers on Sunday as saying that Pande Lubis would be suspended on Monday.

Another IBRA deputy chairman, Arwin Rasyid, said the agency was determined to investigate the matter thoroughly.

"This is a very controversial issue and IBRA is under a lot of pressure," he said at a seminar last week.

Outsiders

Arwin also acknowledged that many outsiders, including well- connected businessmen and politicians, were trying to take advantage of IBRA's huge assets.

IBRA, an agency under the Ministry of Finance, was established last year to help the government in restructuring the country's ailing banking sector. The agency has become the country's most powerful and largest economic entity, controlling over Rp 600 trillion in assets.

Economist Sri Mulyani said the Bank Bali affair had become an acid test to IBRA's credibility.

She said IBRA was supposed to be an agency free of corruption and rent-seeking activities because its responsibility was to help rebuild confidence in the country's shaky banking sector.

"The government must have a strong political will to completely investigate the case," she said.

The Indonesian Democratic Party of Struggle (PDI Perjuangan) also vowed on Friday to set up an investigation team to probe into the Bank Bali matter.

PDI Perjuangan senior official Kwik Kian Gie said the matter must be thoroughly investigated because the revelation made by Pradjoto was factual and that the authenticity of the data was beyond reasonable doubt. (rei)