Resto owner nabbed in bank fraud

Eva C. Komandjaja, The Jakarta Post, Jakarta

The police unveiled on Tuesday they were investigating another crime in the country's fragile banking sector, this time involving the issuance of fake Lippo Bank promissory notes worth Rp 50 billion (US$5.4 million).

Head of National Police fraud squad Brig. Gen. Andi Chaeruddin said the police had arrested pizza restaurant owner Herry Robert last Friday as a suspect in distributing 30 false promissory notes to the bank's customers.

"Our investigation is based around Article 378 on fraud in the Criminal Code," Andi said.

The case highlights how banking crime in the industry, which has yet to fully recover from the devastating impact of the late 1990s financial crisis, remains rampant amid criticism of weak banking supervision and slow progress in the investigation of past banking crimes.

According to the police Herry, who owns three pizza restaurants in Bali, Bandung and Jakarta, applied for a Rp 30 billion loan at Lippo Bank in Kebumen, Central Java, in mid 2004.

Herry chose the branch because he was close to a former branch manager named Anastasia.

Herry apparently made a deal with some bank officers to distribute the false notes in return for having his loan application approved. His loan was approved and he received Rp 31 billion from the bank. He has repaid Rp 9 billion, according to the police.

The police have no other suspects in the case.

"We're still investigating who is actually the mastermind behind this fraud case. We still have to examine evidence and question him (Herry) in order to obtain a clearer picture. It is very likely that we will name more suspects soon," Andi said.

Anastasia, who reported the crime to the police, has not been arrested.

"We shouldn't rush into making a conclusion whether she is a suspect or not," Andi said.

Meanwhile, Herry's lawyer Haposan Hutagalung said his client knew nothing about the false notes as he only borrowed money from the bank to finance his business.

"Herry was only borrowing money, nothing else. He has even repaid Rp 9 billion of the loan so far. If he had intended to commit fraud, he wouldn't have repaid the loan, along with interest, would he?" Hutagalung told The Jakarta Post.

He added that the police should have arrested Kebumen's branch officers instead of his client.

"My client does not know whether the money he borrowed was from illegal activities or not. Besides, it's the bank officers who had the authority to determine whether my client got his loan or not, right?" Hutagalung said.

He regretted the police's decision to arrest his client even though his role in the fraud case had not been determined.

"The police should clarify whether my client is suspected as the mastermind or the distributor or whatever violation, instead of arresting him just like that," Hutagalung said.

He added that he had submitted relevant documents to the police as evidence, such as bank transfers from his client to Lippo Bank Kebumen branch for repayment of the loan.