Govt to wrap up Global's unfinished business
Urip Hudiono, The Jakarta Post, Jakarta
An important final step in the shutdown of fraud-riddled Bank Global International has ended, with the government finishing its verification of the bank's depositor accounts, and honoring 79 percent of them, or 5,213 accounts worth Rp 818.9 billion (some US$83 million) under its blanket guarantee scheme.
Some 1,485 accounts worth Rp 778.2 billion will however be not be paid out, the finance ministry's Director General for Financial Institutions Darmin Nasution announced on Thursday, as the Finance and Development Comptroller (BPKP) has found them linked to the fraud that had caused Bank Global to collapse.
Explaining the final verification, Darmin said that the BPKP has concluded its validation of a remaining 1,888 accounts, which had been left for further examination after the last verification in April. The accounts were set aside because auditors were suspicious that they were fictitious; used by Bank Global's management in illegal "overdrafting" -- transferring numerous funds into bogus accounts.
"Another 553 savings accounts worth Rp 142.31 billion and one non-savings account worth Rp 5.2 million will also be covered, Darmin said.
This means a total of Rp 793.44 billion in 5,146 savings accounts and Rp 25.46 billion in 67 non-savings accounts will be compensated under the blanket guarantee scheme, while a total of Rp 274.5 billion in 1,362 savings accounts and Rp 503.67 billion in more than 123 non-savings accounts -- which include sub-debt bonds and mid-term notes -- will not.
The BPKP and UP3 had received data of 9,872 accounts worth Rp 1.25 trillion from Bank Global's management for verification.
The finance ministry's blanket guarantee implementation unit (UP3), Darmin said, would start payments through selected BNI branch offices on Aug. 3.
Under the scheme, the government must cover all banking obligations to customers -- pending verification -- whenever the authority closes down a bank.
Darmin said a team of banking legal experts the government had consulted with on the case had concluded that the bank's management had used at least three "overdrafting" bank fraud methods, in which several depositors were found to have been involved.
"However, to fulfill the sense of justice of some depositors insisting they had nothing to do with the case, we have decided to take this matter to the President for further advice," Darmin said. He reiterated that the government would take legal action against anyone involved in the fraudulent practices in Bank Global.
Bank Indonesia officially closed down Bank Global on Jan. 13 because of its dire financial situation and overt evidence of fraud in the institution.
Since the 1997 financial crisis, the cash-strapped government has guaranteed all deposits -- using state funds -- to ensure public trust was kept in banks, despite the still emerging cases of internal bank fraud.
The government plans to establish a Deposit Insurance Agency in September, requiring all banks to pay a fee of 2 percent to fund the agency. By 2006, the fund will only guarantee an individual deposits amounting to a maximum of Rp 100 million.