Government loses first case on BLBI funds

Government loses first case on BLBI funds

JAKARTA (JP): The government lost its first legal fight in
recovering billions of dollars of Bank Indonesia liquidity
support as the South Jakarta District Court acquitted on Tuesday
deputy director of PT Bank Aspac Hendrawan Haryono of corruption
charges.

The court however ruled that the defendant was found guilty of
violating banking regulations by not registering with BI two
promissory notes which Bank Aspac sold to PT Bank Exim. Both
banks have already been liquidated.

For violating Article 49(b) of Banking Law No. 7/1992, the
three-member panel of judges sentenced Hendrawan to one year in
jail minus his detention period and ordered him to pay a Rp 500
million fine or continue another three months of imprisonment.

The sentence was much lighter than the prosecutors's demand of
five years imprisonment for Hendrawan, who along with his
relative Bank Aspac president director Setiawan Harjono, was
charged with tailoring the bank's performance to obtain the BI
liquidity support, a crime which allegedly caused Rp 583.4
billion in losses to the state.

Hendrawan, who had been detained for nine months during the
investigation, was charged with amassing Rp 380 million for his
own interests.

In handing down the verdict, the panel of judges considered
the defendant had tarnished his company's image and international
trust in Indonesian banking.

Among the mitigating factors the judges took into account were
that Hendrawan was cooperative, and the country remains in need
of his banking expertise to help develop the country.

The prosecutors objected to the verdict and were considering
an appeal.

"During the hearings, both the charges of corruption and the
violation of banking regulations were all proven according to
testimonies by witnesses and the defendant himself.

"It seems to me that the case and the verdict are two separate
things, therefore we're considering further legal action,"
prosecutor Soetantyo told journalists after the trial.

The trial of the Bank Aspac case was the first out of 48 banks
which were alleged to have misused 95 percent out of the Rp 144.5
trillion (more than $12.5 billion) extended to them in liquidity
support during the economic crisis between 1997 and 1999.

Instead of using the funds to reimburse depositors during the
massive bank runs, the banks used the money for other purposes
including foreign exchange speculation, lending to affiliated
business groups and for repaying subordinated loans.

Other cases in the waiting list to be brought to trial,
include, among others, corruption cases connected with Bank
Dagang Nasional Indonesia, Bank Modern, Bank Umum Servitia and
Bank Umum Nasional.

The office had earlier filed a civil lawsuit against Bank
Deka, Bank Pelita, Bank Istimarat and Bank Centris. (bby)