Government in a bind in battling graft
Government in a bind in battling graft
JAKARTA (JP): Coordinating Minister for Economy, Finance and
Industry Kwik Kian Gie said on Wednesday that the new government
was facing a dilemma in rooting out corruption in the country
because of its huge scale.
He said uncovering and prosecuting those involved in the
billions of dollars of corruption at state banks alone would lead
to a large number of businesspeople and bankers being imprisoned
and runs the risk of crippling economic activities.
Kwik asked legislators whether they were ready if all cases of
corruption, collusion and nepotism (KKN) at state banks were
disclosed.
"The results will be shocking. The total amount of their bad
loans could reach Rp 600 trillion (US$85 billion), which is three
times the size of our state budget," Kwik told the House of
Representatives.
"This is a dilemma the government is facing," he said.
Kwik's remarks followed last week's revelation by Minister of
Investment and the Empowerment of State Enterprises Laksamana
Sukardi of an alleged Rp 9.6 trillion loan scandal involving the
giant textile and engineering Texmaco Group and former president
Soeharto.
Texmaco founder and CEO Marimutu Sinivasan denied the charges,
although he was immediately named a suspect in the scandal.
Several legislators demanded the resignation of Laksamana,
arguing that his revelation of the Texmaco case caused a serious
blow to the company's debt restructuring process.
Bank Putera Multikarsa, Texmaco's financial arm, was hit by a
massive run by depositors early this week causing it to suffer a
severe liquidity crisis that prompted the central bank to suspend
its clearing activities on Tuesday.
Laksamana and Kwik are both senior members of the Indonesian
Democratic Party of Struggle (PDI-Perjuangan), the largest
faction in the House.
The two were strong critics of the former, allegedly corrupt,
administration of Soeharto.
But Kwik assured the House Abdurrahman Wahid's administration
was determined to fight corruption despite the dilemma and
possible strong resistance from bureaucrats who had been part of
the past regime.
He called on the House to support the drive to root out
corruption and create a clean government.
Kwik said there were 12 other cases similar to the Texmaco
affair.
He said the amount of money involved in the Texmaco affair was
even smaller than the sums involved in several other major cases
which would be revealed.
"The amount of bad loans in state banks reach hundreds of
trillions of rupiahs. I will release them later on," he said.
Cleaning up state banks is a key factor in the success of the
country's costly bank restructuring program. It's no longer a
secret that they were often treated as a cash cow by Soeharto and
his family members and cronies.
The state banks have transferred more than Rp 267 trillion
worth of bad loans to the Indonesian Bank Restructuring Agency
(IBRA).
Kwik said many of the bad debtors had inflated the value of
their projects and the collaterals pledged to secure their loans
from state banks.
"If their collaterals were audited properly, their real value
could plunge 40 percent," Kwik added.
He said the present government inherited a bankrupt economy
from officials and businesspeople alleged to have been involved
in KKN practices.
"We will open the credit portfolios of state banks one by one
and will disclose them to the people," Kwik said.
Kwik also called on the House to deal firmly with its members
who received money from conglomerates in return for not revealing
their KKN practices at House meetings.
Disclosing the debt profiles of large bad debtors would not
hinder economic recovery because their businesses had been
damaged anyway, Kwik added. (rei)