Revisiting Baligate

The Jakarta Post, Jakarta

Before Buloggates I and II made their way into the headlines, there was Baligate. The political scandal erupting at Bank Bali was the first and by far the most devastating one to have shocked Indonesia's political landscape.

Baligate occupied local news reports for over a year and along the way helped drowned B.J. Habibie's presidency.

The scandal erupted in mid 1999, when it was revealed that Bank Bali made use of the brokerage service of PT Era Giat Prima (EGP) to recoup some Rp 3 trillion (about US$300 million) in interbank claims.

The bank did reclaim Rp 900 billion, but had to pay Rp 550 billion in "brokerage fees" to EGP, which turned out to have been set up the then ruling Golkar party to fund its political campaign machinery.

As the scandal unfolded, more high ranking officials became tainted with the scandal, of whom Bank Indonesia Governor Sjahril Sabirin is the first to be convicted.

British based Standard Chartered Bank Plc had also agreed to buy a 20 percent stake in the bank just shortly before the scandal erupted.

StanChart weathered the Baligate storm, yet later withdrew its bid anyway with opposition from Bank Bali employees also being a factor.

The International Monetary Fund (IMF) and the World Bank demanded a full disclosure on the Baligate scandal.

But analysts have said Baligate as only the tip of the iceberg with many other shady deals are abound forcing local banks into money machines for political parties.