Probe BNI case seriously: Mega

Fabiola Desy Unidjaja and Rendi A. Witular , The Jakarta Post, Jakarta

President Megawati Soekarnoputri urged law enforcers on Monday to investigate thoroughly and punish those involved in the high- profile lending fraud at state-owned Bank Negara Indonesia (BNI).

The call came to provide moral support for the law enforcers, as they might be hesitant to solve the case -- particularly amid reports of the possible involvement of well-connected people and key politicians hungry for funds to finance electoral campaigns.

"The president said all who are involved in the case must be investigated. No one is untouchable," said State Minister of State Enterprises Laksamana Sukardi after attending the first high-level government meeting to discuss the BNI fraud since the case broke out in October.

The meeting was also attended by Coordinating Minister for Political and Security Affairs Susilo Bambang Yudhoyono, Coordinating Minister for the Economy Dorodjatun Kuntjoro-Jakti, Indonesian Military chief Endriartono Sutarto, National Police chief Da'i Bachtiar, Head of the National Intelligence Agency A.M. Hendropriyono, Attorney General M.A. Rachman and Bank Indonesia Governor Burhanuddin Abdullah.

One of the main decisions of the meeting was to ensure the closer coordination among relevant agencies to investigate the case and to track down the flow of the loans. The agencies are to periodically report the progress of investigations to the president.

The police has so far detained two BNI senior officials and three other people in connection with the crime.

The BNI scandal, which centers on the improper disbursement of Rp 1.7 trillion (US$200 million) in export loans to a number of local companies, has taken on a political dimension with the alleged involvement of top politicians ahead of the 2004 general elections.

When asked whether authorities would publicly reveal the flow of the embezzled funds, Laksamana said the government was still undecided on this matter, as such a move could potentially disrupt the investigation process. He did not elaborate.

Meanwhile, after a hearing with the managements of BNI and Bank Rakyat Indonesia on Monday, House of Representatives Commission IX for financial affairs unveiled plans to set up its own a special committee to probe the scandal, as the case had dragged in several top politicians.

Commission IX vice chairman Faisal Baasyir said the planned committee might also ask the Supreme Audit Agency (BPK) to assist in the investigation to make sure there were no other fraud cases that may have been covered up by the BNI management.

The Commission is to decide on this on Wednesday.

During the hearing, BNI president Saifuddien Hasan said the bank now expected to recover around Rp 1.04 trillion (US$122 million) of the abused loans.

"We have recouped part of the loans. However, we are still assessing the amount to get an accurate figure," said Saifuddien.

He explained that the figure consisted of $72.2 million the bank had already recouped when the case first broke out in October and Rp 433 billion in collateral and seized assets in the form of equity, trade receivables and deposits owned by the suspects.

The fraud at BNI, the country's second largest bank in terms of assets, highlights the failure of the bank to conduct a proper credit appraisal before allowing its Kebayoran Baru, South Jakarta, branch to disburse export loans to several local businessmen who claimed to be exporting commodities to the Congo and Kenya.

The debtors used as collateral letters of credit (L/Cs) guaranteed by banks in Kenya, Switzerland and the Cook Islands, and the bank provided the credits from December 2002 to July 2003. It was later discovered that the businessmen had never exported the commodities.

Saifuddien said he had no plans to submit his resignation, although two of the bank's directors -- compliance director Mohammad Arsjad and risk management director Binsar Pangaribuan -- had already made such a move.

"I will not resign ... I will leave the decision to the shareholders," he said after the hearing.

The shareholders will hold a meeting on Dec. 15 to decide on a reshuffle of the bank's top management.