New BNI chief pledges to strengthen internal supervision

Rendi A. Witular and Eva C. Komandjaja, The Jakarta Post, Jakarta

The newly appointed president of state-owned Bank Negara Indonesia (BNI), Sigit Pramono, said he would improve internal supervisory systems at the country's second largest bank to help prevent corrupt practices from reoccurring in the future.

"The new management will boost the bank's supervisory system because fraud cases in a bank could only occur with the help of the bank's officials," Sigit told reporters on Tuesday on the sidelines of Bank Internasional Indonesia's (BII) extraordinary shareholders meeting, which approved a management reshuffle at the bank, including dismissing Saifuddien Hasan as president.

Sigit said the new management would try to cooperate with other related institutions to help improve the supervision system.

Shareholders of troubled BNI decided on Monday to fire seven of the bank's nine-member board of directors, and appointed Sigit as new president following the recent revelation of a high- profile lending fraud involving Rp 1.7 trillion (US$200 million) at the bank.

Shareholders had also agreed to grant a release and discharge (R&D) status for the outgoing BNI directors, including former president Saifuddien Hasan, in order for them to be freed from being responsible for any technical policy and strategy taken during their service.

However, according to BNI corporate secretary Lilies Handayani, the R&D would leave them immune from facing criminal charges if they are suspected of committing crimes during their tenures.

Elsewhere, concerning the lending fraud and its settlement, Sigit said the new management would form a special team to investigate the case and to find ways of recovering the losses.

"We are going to form a special team to handle the case, so that we don't have to waste our energy and time for it .... Among members of the team will be Mohammad Arsjad."

Arsjad is a former BNI director for compliance who resigned from his post weeks before the bank's shareholders' meeting.

Commenting on the appointment of Sigit and other new directors, legislator Hakam Naja, a member of the House of Representatives Commission IX for financial affairs, welcomed the appointment of Sigit.

However, he regretted the government's decision to maintain the bank's old commissioners, saying they had failed to conduct proper supervision.

The old commissioners are Zaki Baridwan, Irwan Sofyan, Agus Haryanto and Arif Arryman.

Ruster

Sigit helps turn around BII

Sigit Pramono has proven himself as a reliable banker when the government trusted him to pilot the ailing Bank Internasional Indonesia in September 2002, after the government rescued the bank from the late 1990s financial crisis.

When Sigit first took the job, the bank's capital adequacy ratio (CAR) was -51.6 percent with a non-performing loan (NPL) level of 62.2 percent.

But now, BII, the former financial flagship of the Sinar Mas Group conglomerate, has a CAR standing at 24.49 percent and NPL at 7.55 percent as of the first nine months of this year. The bank's net profit also surged to Rp 221 billion (US$26 million) from Rp 30.6 billion a year earlier.

At present, BII is the country's sixth largest bank in terms of assets.

Sigit was born in Batang, Central Java on Nov. 14, 1958. After graduating from his study in corporate management at Diponegoro University in 1983, he decided to engage in the banking business by joining the now dissolved state-owned Bank Exim in 1984.

From 1985 to 1987, Sigit was an assistant manager for domestic banking division, before becoming an assistant manager in treasury and international banking division from 1987 to 1988.

Sigit also had experiences in the non-banking industry from 1988 to 1992.

In 1993, Sigit returned to the banking business when he served as vice president director for Bank Merincorp, a subsidiary of Exim, before returning to Exim in 1997.

In Exim, he was posted as head of the loan syndication department, and a year later served as division head in the loan remedy division.

When Exim and three other state-owned banks merged to become Bank Mandiri in 1999, Sigit was placed as division head in the loan work out division for a brief period, and later on trusted as a senior vice president for the credit restructuring unit August 2001, and as a senior vice president for credit recovery group from August 2001 to May 2002.

The government afterwards appointed Sigit as head of the restructuring and management team for BII, before taking the bank's top position.