Loan scandal hits Bank Mandiri

MAGELANG, Central Java: Some Rp 24 billion (US$2.8 million) has been embezzled from Bank Mandiri's Magelang branch, adding yet another scandal to Indonesia's bank industry.

"Three people have been named suspects, and they are being questioned by the police," said Insp. Gen. Didi Widayadi, the chief of Central Java Police, on Friday.

He said that the scheme, which was used by the irresponsible parties, was similar to the one committed by suspects in the BNI and BRI scandals recently.

The BNI loan scandal centered on the channeling of export credits without proper appraisal by the bank's Kebayoran Baru branch in South Jakarta to a number of local companies to finance the export of commodities to the Congo and Kenya.

The exporters, identified as the Petindo Group and Gramarindo Group, backed up their loans request with letters of credit (L/Cs) from banks in Kenya, Switzerland and the Cook Islands. It later turned out that the exports never materialized, causing BNI to lose Rp 1.7 trillion. -- JP