No misconduct found in use of BI liquidity credits

No misconduct found in use of BI liquidity credits

JAKARTA (JP): The House of Representative on Monday said that
so far it has found no misconduct over the obtainment and use of
Bank Indonesia's emergency liquidity credits by four private
banks.

The chairman of the House's Commission IX for finance and
banking, Sukowalujo Mintorahardjo, said that the House did not
find any indication of wrongdoing after conducting a hearing with
executives of Bank Central Asia, Bank Danamon, Bank Dagang
Nasional Indonesia (BDNI) and Bank Umum Nasional (BUN).

BDNI and BUN were already closed down by the government.

"However, we will crosscheck their statements with the
Indonesian Banking Restructuring Agency (IBRA)," said Sukowalujo,
also chairman of the House's special team, after a hearing with
former directors of Bank Danamon and BUN.

The four banks were the largest recipients of the liquidity
credits. They were among those whom the Supreme Audit Agency
(BPK) suspected of having improperly received and used BI's
liquidity support during the economic crisis in 1997 and 1998.

"We've asked them about the irregularities as reported by BPK,
but they haven't even read BPK's report," he said.

Sukowalujo said that the main problem behind BPK's charges of
malfeasance may have been because BI or the government acted too
late in providing its blanket guarantee program for bank
obligations.

He said BI or the government should have introduced its
guarantee program before it closed down 16 private banks in
November 1997, which triggered a demand for cash in most local
private banks.

"The liquidation of these banks had caused people to loose
confidence in our banks," he said.

Meanwhile, Usman Atmadjaya, former chairman of Bank Danamon,
rejected claims that BI's liquidity funds had been used to
finance companies under its own business group.

"Companies under the Danamon group supported the bank when it
was out of money," Usman said.

He said the liquidity credits were partially used to cover the
cash run which amounted to some Rp 29.6 trillion (US$3.9
billion).

According to Usman, the bank paid Rp 13.7 trillion in cash to
cover BI's credits, while the rest was to be covered by capital
injections from the government through its recapitalization
program.

Leonard Tanubrata, former BUN president, also denied any
malfeasance in the use of BI's liquidity funds.

He said the funds had been channeled and used in accordance
with proper procedures.

Leonard declined to mention how much BUN received in liquidity
funds but said that in total the bank had repaid Rp 14 trillion
in cash, property and other assets.

BCA was the largest recipient of liquidity credits, obtaining
more than Rp 30 trillion, followed by BDNI with Rp 28 trillion.

Last week, directors of BCA and BDNI reported to the House's
special team that BCA had repaid the government Rp 19 trillion,
while BDNI had repaid Rp 27.4 trillion mostly in property and
other assets.

During last week's meeting, the bank was unable to answer the
team's questions as, due to an administrative mistake, the bank's
new management attended the meeting instead of the former
management whom BPK suspected of misconduct.

Today, the special team will have a hearing with former BI and
government officials. (03)