Police make progress in bank scam investigation

JAKARTA (JP): Police claimed yesterday they were making good progress in an investigation of a huge corruption scandal at PT Gunung Agung's subsidiary Bank Arta Prima.

City Police Detective Chief Col. Gories Mere said the police had accomplished at least 40 percent of the investigation.

"Police found six commercial papers in addition to the first five papers confiscated as evidence.

"They are valued at hundreds of billions of rupiah. I don't remember the exact value. But one of the papers is worth around Rp 30 billion (US$12.2 million)," Gories said.

Gories emphasized earlier that police would not put the six detained businessmen, especially those who are believed to have played a major role in the scam, under house arrest.

"Police have enough evidence to keep them in detention for further investigation," Gories said.

Police had arrested six businessmen for alleged involvement in a scam worth Rp 1.2 trillion, comprising of Rp 324 billion in commercial papers underwritten by Bank Arta Prima and Rp 700 billion in bad loans.

The six detained businessmen include Made Oka Masagung, the former main shareholder and now advisor to PT Gunung Agung, a widely diversified publisher of books, a bookstore chain and other businesses.

Another detainee is businessman Kim Johanes Mulia of PT Jagata Primabumi, which took over Bank Arta Prima from Gunung Agung in July 1995.

Police believe Kim was the mastermind behind the scam.

In the scam, Jagata Primabumi converted commercial papers worth Rp 107 billion into Bank Arta Prima's capital to artificially increase it to Rp 207 billion from Rp 100 billion.

Jagata Primabumi then sold Bank Arta Prima to Bank Artha Graha, which reported the scam to police.

Both Made Oka Masagung and Kim Johanes Mulia have been prohibited from leaving the country since May 7.

The other four who are being detained are Chaidil Aini and Husni Ali Thaqil, respectively former president and director of Bank Arta Prima, and Hari Suhalim and Marul Maulana, the bank's former commissioners.

Made's lawyer, Denny Kailimang from Rudhy A. Lontoh, Denny Kailimang and Associates law firm, earlier questioned why the articles under which his client had been charged had been changed.

"The articles which were first used to nail my client were different from the ones used to extend his detention term," Denny said.

Made was previously charged under Article 263 of 1971 Law No. 3 on corruption, Denny said.

However, it was replaced with Article 49 (1) of the 1992 Banking Law as stated in a letter from the police and the Attorney General Office's to extend Made's detention, Denny said.

In line with the changes in articles, the office extended Made's detention at City Police Headquarters until July 4.

Denny said that police might have acted hastily in arresting Made and the other five former bank executives on corruption charges.

Police have questioned at least 10 witnesses, including former executives of the bank, employees and banking experts.

Gories said that developments after further investigation might involve other executives of the bank as well.

"If other former executives are found to be involved in the scam, they will also be arrested," Gories said. (cst)