Probe BNI case seriously: Mega

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.