KPK probing BNI-Texmaco scandal

KPK probing BNI-Texmaco scandal

Abdul Khalik, Jakarta

The Corruption Eradication Commission (KPK) has just embarked on
an investigation into the alleged misuse of trillions of rupiah
by giant textile company PT Texmaco and state-owned bank PT Bank
Negara Indonesia (BNI).

KPK member Erry Riyana Harjapamekas said that the
investigation was opened because there were indications of huge
losses of taxpayers' money.

Erry said that the commission had questioned people from BNI,
the Indonesian Bank Restructuring Agency (IBRA) and Texmaco, but
no suspects had been named yet.

The KPK is now evaluating the precise amount of state losses
from the transactions, which were part of preshipment facility
funds over a six-year period, said Erry on Friday. The commission
would be very meticulous in probing the case as many of the
alleged irregularities took place several years ago during
complicated business deals, Erry commented.

The Texmaco case first came to light when Laksamana Sukardi,
the then Minister of State Enterprises and Investment under
President Abdurrahman Wahid administration, testified on November
29, 1999 to the House of Representatives (DPR), that former
President Soeharto and Texmaco had worked together to arrange for
a state bank to extend credit to the textile giant.

Following that testimony, the founder of PT Texmaco Marimutu
Sinivasan was declared a suspect by the Attorney General's Office
(AGO), but pressure from politicians -- especially from the
Golkar Party, which has links to Marimutu -- forced the AGO to
halt the investigation. They claimed there was insufficient
evidence to make a case.

In a later development, PT Texmaco almost sent Bank BNI into
bankruptcy when it defaulted on debts worth some Rp 9.8 trillion.
The government moved in to bail out the bank and Texmaco's
massive debts were then taken over by the Indonesian Bank
Restructuring Agency (IBRA). Texmaco and IBRA agreed on the
restructuring of those debts in 2000.

Part of the deal was that IBRA agreed to guarantee up to $100
million borrowed from BNI under another trade financing facility.
BNI said it had only lent money after the IBRA guarantee.

Aside from investigating the company itself, Erry said that
KPK would look into why BNI continued channeling huge amounts of
low-interest export credit funds to the troubled company, and the
fact that the credit had exceeded the legal lending limit. The
KPK also wants to find out why there was such secrecy surrounding
IBRA's dealings with Texmaco, he added. "We will concentrate on
the role of the BNI and IBRA officers in the transactions," said
Erry.

The government continues to support Texmaco, not only because
it still hopes the company can repay its debts, but also because
it worries about the welfare of Texmaco's thousands of workers.

Texmaco employs around 150,000 people and has five factories
across Java, including synthetic fiber and machine tool
factories. Some legislators have even called the group a national
asset, and its flagship, PT Polysindo Eka Perkasa, is the world's
leading polyester producer and the 12th largest company in
Indonesia.

However, the company has frequently defaulted on its interest
and debt installments since its 2000 agreement with IBRA. In
April 2003, the company failed to pay US$25 million payment to
BNI, while the company also failed to pay its $67 million debt
payment earlier this year.

The government has tried in vain to sell the company to
foreign buyers before IBRA was dissolved in February this year.
Texmaco is now being handled by the new Asset Management Company
(PPA), which replaced IBRA.