Police asked to investigate bankers
JAKARTA (JP): Bank Indonesia has formally asked the police to investigate the management of nine banks closed down late last year on suspicion of violating banking laws, a Bank Indonesia director said here yesterday.
Achjar Iljas did not name the banks, nine of 16 liquidated by the government last November, but confirmed that one of the violations was breaching the legal lending limit.
He said that loans made by the banks to their owners and affiliated companies had exceeded the maximum level set by the central bank.
"I think the matter is worthy of police investigation," he told reporters yesterday after speaking at a seminar on banking and monetary policy.
Achjar said the central bank filed four cases with the police in May, two in June and three more in July.
He added that the central bank would continue to study the affairs of other banks and would report them to the police if necessary.
The government liquidated 16 insolvent private banks in early November last year as part of efforts to restructure the ailing banking sector.
The banks liquidated were Bank Andromeda, Bank Jakarta, Bank Pacific, Bank Industri, Bank Pinaesaan, Anrico Bank, Astria Raya Bank, Bank Harapan Santosa, Bank Guna Internasional, Sejahtera Umum Bank, Bank Umum Majapahit Jaya, Bank Kosagraha Semesta, Bank Mataram Dhanarta, Bank South East Asia, Bank Dwipa Semesta and Bank Citrahasta Dhanamanunggal.
Bank Andromeda was owned by Bambang Trihatmodjo, the second son of former president Soeharto; Bank Jakarta was controlled by Probosutedjo, Soeharto's half brother; and Bank Pacific had close connections to Ibnu Sutowo, a close friend of Soeharto.
Although the government guaranteed deposits in the 16 banks, the liquidation sent shockwaves through the domestic banking sector and sparked off massive runs on other banks.
The central bank then had to provide more than Rp 140 trillion in liquidity to help banks meet the demands of depositors clamoring to withdraw their money.
In January the government froze the operations of seven private banks and put a further six under the management of the Indonesian Bank Restructuring Agency (IBRA).
The six banks are Bank Danamon, Bank Umum Nasional, Bank BDNI, Bank Modern, Bank Tiara and Bank PDFCI. The banks have received Bank Indonesia liquidity credits in excess of 500 percent of their capital.
Four of the banks under IBRA management have been declared insolvent but their names have yet to be made public.
Some are demanding the authority close down the insolvent banks immediately and bring their management and owners to trial for using depositors money illegally for their own purposes and for failing to pay back massive liquidity credits provided by the central bank.
Bank Indonesia Governor Sjahril Sabirin, however, said that liquidity credits to the troubled banks had been secured against their assets, including bank owners' personal assets.
"We are working hard to secure the liquidity credits," he told the Supreme Advisory Council on Tuesday.
Banking analyst Laksamana Sukardi said the investigation of troubled banks should focus on those which violated the legal lending limit criteria.
"We have to bring the management and owners of banks who have channeled credit into their own groups to justice," he said.
He added that debtors who fail to pay back their loans should also be brought to court.
"The financial authorities must be careful about handling this type of case so that they maintain their credibility," he said, pointing out that a distinction should be made between banks afflicted by the monetary crisis and those that are in trouble because of the malpractice of their owners and management. (rei)