One-year jail term sought for ex-banker

Muninggar Sri Saraswati, The Jakarta Post, Jakarta

Due to a lack of evidence, prosecutors recommended that the Central Jakarta District Court sentence former president commissioner of now-defunct Bank Modern Samadikun Hartono to one year in jail for misusing Bank Indonesia Liquidity Support (BLBI) funds in 1997.

Chief prosecutor Y.W. Mere, who had earlier indicted Samadikun for allegedly misusing Rp 1.7 trillion in BLBI funds, also demanded the defendant pay a Rp 20 million fine.

During the hearings, which started in August last year, prosecutors found that the bank had misused only Rp 169 billion, not Rp 1.7 trillion as originally alleged.

It was also proven, Mere said, that the bank had disbursed the money in several installments to several companies within the Modern group, which was owned by Samadikun.

However, Mere said that Samadikun was only responsible for the purchase of promissory notes issued by state-owned electricity company PT PLN, worth Rp 11.9 billion, by Bank Modern, using the BLBI funds.

"As president commissioner, Samadikun was responsible for permitting the bank to disburse a loan worth Rp 10 billion or more," he said, adding that expert witnesses in the hearing supported the assertion.

The government provided the BLBI funds from 1998 to 2000 to assist 48 commercial banks to deal with massive run during the monetary crisis. But apparently some Rp 137 trillion (US$13.3 billion) of the funds was misused during 1998 and 1999.

The central bank channeled the funds in several ways, including the provision of overdraft facilities for the troubled banks. It enabled troubled banks to participate in the clearing process even though, technically, their funds were not sufficient.

Mere admitted that Bank Modern had used the overdraft facility to withdraw Rp 80 billion in loan to a company in the Modern group. However, he argued that the disbursement was lawful as Bank Modern had withdrawn the funds through a clearing account.

"It was lawful, according to a letter from the central bank in 1997, which permitted fund withdrawals through the clearing process," Mere told reporters after the hearing.

Wearing a yellow batik shirt, Samadikun appeared calm, although he refused to make any comment.

The state has suffered more than Rp 137 trillion (US$13.3 billion) in losses through BLBI misuse.

Several cases have been taken to court in the hope that BLBI abusers would be punished and the state retrieve the funds. However, the outcome has been unsatisfactory.

The government lost its first legal battle, as the South Jakarta District Court acquitted of corruption charges last year Hendrawan Haryono, former deputy director of now-defunct Bank Aspac.

But he was sentenced to one year in jail for violating Article 49B of Banking Law No. 7/1992. The court ordered him to pay Rp 500 million in compensation, although the bank had caused state losses amounting to Rp 583.4 billion due to BLBI misuse.

Another defendant, David Nusa Wijaya of Bank Servitia, was sentenced earlier this year to one year in jail and was ordered to repay Rp 1.27 billion in BLBI funds, which his bank had misused, to the state.

Tougher sentences were handed down by the Central Jakarta District Court, which sentenced Hendra Rahardja of Bank BHS to life, as well as Eko Edi Putranto and Sherny Kojongian of the same bank, to 20 years in jail. However, they were tried in absentia.

Banking law expert Pradjoto warned earlier that most judges and prosecutors, who had little or no knowledge on the issue, could easily be fooled by defense lawyers who would cunningly argue that their clients were innocent because they had only followed state policy on BLBI.