Saga of the convicted central bank governor

Saga of the convicted central bank governor

Vincent Lingga, Senior Editor, The Jakarta Post, Jakarta

Bank Indonesia Governor Sjahril Sabirin is now a convict after
he was found guilty of corruption by the Central Jakarta District
Court on Wednesday for violating prudential banking rules in
relation to what is popularly known as the Bank Bali scandal.

Chairman of the Golkar party and Speaker of the House of
Representatives Akbar Tandjung, a suspect in the Bulog fund
scandal, was earlier put into detention by the attorney general.

But both officials remain in office. Bizarre, isn't it?

Certainly not in Indonesia, which has been languishing in a
multidimensional quandary since 1998 because of the complications
of the economic crisis, the transition from three decades of
authoritarian rule to democracy and from strong, centralized
government to regional autonomy.

It is business as usual. Neither seems to have become
demoralized, stubbornly clinging to their respective state posts.
They are not legally required to temporarily relinquish their
posts. Nor have they shown any moral courage to do so.

Like most other senior officials convicted of corruption or
facing graft charges, both Sjahril and Akbar insist they are
innocent, claiming they are simply the victims of political power
games.

Are they?

This is an area within the authority of the court to decide.

However, insofar as Sjahril's case is concerned, there are a
lot of questions looming over the manner in which the government
has so far handled the Bank Bali scandal, which was partly
responsible for killing then president B.J. Habibie's chance of
reelection in October, 1999.

PricewaterhouseCoopers (PwC), which investigated the scam,
concluded in its 135-page report, which was supplemented by more
than 35 documents as supporting evidence, that there were
numerous indications of noncompliance, irregularity,
misappropriation, undue preferential treatment, concealment,
bribery and corruption and fraud found in the processing and
payment of Bank Bali interbank claims.

It recommended several senior officials and businessmen for
further investigation but so far only four, including Sjahril,
have been taken to court.

Strange, though, three earlier defendants, Rudy Ramli, Pande
Lubis and Djoko Tjandra, were acquitted of all charges by courts
in 2000.

PwC conducted a special investigation of the fund scam in
September, 1999 at the request of the chairmen of the Indonesian
Bank Restructuring Agency (IBRA) and the Supreme Audit Agency.

Here is a recap to refresh our memory of the Bank Bali
scandal, which started to explode in the mass media in late July,
1999, and was later investigated by a special House committee.

Sometime in October-November, 1998, Bank Bali president Rudy
Ramli was approached by several politically well-connected
businessmen, who offered assistance to recover Bank Bali's
interbank claims for a fee.

At that time, Rudy was on the verge of desperation, having
spent almost one year getting the claims settled, but both IBRA
and the central bank, in charge of verifying the claims, rejected
them as ineligible for payment under the government blanket
guarantee for bank deposits and claims.

The guarantee scheme is managed by IBRA, an agency under the
Ministry of Finance.

Since Rudy already considered the claims a total loss, he did
not see any harm in accepting the offer. He and another Bank Bali
director, Rusli Suryadi, signed on Jan.11, 1999 a "cessie
agreement" with PT Era Giat Prima, an unknown company managed and
owned by Djoko Tjandra, a politically well-connected property
developer, and Setya Novanto, a deputy treasurer at the Golkar
party.

Also around October-November, 1998, then finance minister
Bambang Subianto, who supervised IBRA, offered one of his long-
time friends, Pande Lubis, formerly an executive of a state bank,
a senior position at IBRA. Pande later accepted the offer and
joined IBRA in December, 1998 as a deputy chairman (one of four).

Then on Feb. 11, 1999, Rudy was invited to a special meeting
at Hotel Mulia that was also attended by A.A. Baramuli, a Golkar
leader and Chairman of the Supreme Advisory Council, Novanto from
Era Giat Prima, Bank Indonesia Governor Sjahril Sabirin, Minister
of State Enterprises Tanri Abeng, Pande Lubis from IBRA and
several other senior officials.

During the meeting Baramuli allegedly asked Sjahril to give
special attention to speeding up the processing and payment of
Bank Bali's interbank claims to Bank Dagang Nasional, Bank Umum
Nasional and Bank Tiara, which had been closed and put under
IBRA.

Also around February, Baramuli asked minister Bambang to
replace IBRA chairman Glenn Yusuf with Pande but to no avail.
Then, in March, Baramuli went over Bambang's head and suggested
directly to then president B.J. Habibie that Pande be named IBRA
chief. But Habibie was convinced by Bambang that Pande was not
qualified to lead IBRA.

Then things suddenly moved, starting in mid-February. Pande
took over all files of Bank Bali claims and arranged a series of
meetings with Bank Indonesia officials and Bank Bali executives
starting in mid-February to reexamine and process the Bank Bali
claims.