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)