Pradjoto vows to fight IBRA irregularities

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)