Revisiting Baligate

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.