Pradjoto vows to fight IBRA irregularities

JAKARTA (JP): Legal banking expert Pradjoto vowed on Thursday to continue his crusade against irregularities at the Indonesian Bank Restructuring Agency (IBRA) despite threats made to his life.

He insisted on Thursday that the use of a mediator in assisting Bank Bali to recoup its interbank claims on a closed- down bank was not normal business practice.

This rent-seeking practice only increased the budgetary cost of the government-sponsored bank restructuring and recapitalization program, Pradjoto added.

He said that Bank Bali should not have paid such a huge fee (Rp 550 billion) for the mediator because the interbank claims on closed-down banks were supposed to be guaranteed by IBRA, an agency under the Ministry of Finance, in light of the government guarantee on bank deposits and claims introduced in late January 1998.

"I will fight this kind of transaction. I will not back out even though my life is being threatened," he told reporters in a joint media conference with the ruling Golkar party.

Pradjoto disclosed the Bank Bali scandal at a seminar last Friday and it has now become a high profile scam.

He alleged that businessman Setya Novanto, who is also deputy treasurer of Golkar, colluded with IBRA deputy chairman Pande Lubis to force Bank Bali to give them some Rp 550 billion to enable the bank to recoup its Rp 904 billion in interbank claims on now-defunct Bank BDNI.

Novanto confirmed on Tuesday the Rp 904 billion transaction, but defended that his service to Bank Bali was in normal business practice. But he declined to state the amount of fees he received.

Pradjoto came to Golkar headquarters to clarify his disclosures at a seminar last week, asserting that he never directly or explicitly implicated Golkar in the alleged scandal.

Several Golkar top officials, including its chairman Akbar Tandjung, accompanied Pradjoto at the media conference.

Akbar announced on the occasion that he had set up a special team to investigate the alleged scandal.

"This (the Bank Bali scam) has severely shaken the bank restructuring and recapitalization program," Pradjoto said.

"This case has to be thoroughly investigated because it (the transaction) is against the law and entirely inappropriate," he added.

"I know that I'm no longer fighting alone... but even if I die, the motherland will embrace my body with a smile," he said.

Pradjoto earlier claimed that he and his family were threatened by certain people after his disclosure of the Bank Bali scam.

Pradjoto is set to meet with officials of the Indonesian Democratic Party of Struggle (PDI Perjuangan) on Friday to gather support for his crusade against fraud in the banking industry and with authorities.

He is also scheduled to meet with the National Awakening Party (PKB) on Saturday.

PDI Perjuangan and PKB are the largest opposition parties.

Meanwhile, concerns over the Bank Bali affair continue to get stronger.

The Indonesian Transparency Society (MTI) said in a statement that the government had to immediately clarify the payment made by IBRA to Bank Bali.

The Indonesian National Private Banks Association (Perbanas) earlier lambasted IBRA for the slowness in repaying interbank claims on closed-down banks. Most banks had not yet received payment from IBRA.

"In order to maintain the credibility of IBRA, any one of its executives allegedly involved in the unfair transaction should be suspended to allow for a smooth investigation process," said MTI in the statement signed by its chairman Mar'ie Muhammad.

MTI also urged the International Monetary Fund (IMF) and the World Bank to be active in settling the scam.

Separately, PT Hanil Bakrie Finance lambasted IBRA for its inconsistent policy, citing a May 14 ruling the agency and Bank Indonesia issued.

This ruling stipulates that bank obligations made to or originate from the bank's related parties are not covered by the government guarantee scheme, Hanil Bakrie president S.C. Chung said on Thursday.

The May decree annulled the earlier March ruling which stipulated that a wide range of bank obligations were guaranteed, except obligations to companies partly owned by the shareholders of the bank creditor.

Hanil Bakrie has a standby letter of credit claim on closed- down Bank Umum Nasional. (rei)