Scandal may delay sale of BNI
Scandal may delay sale of BNI
Associated Press, Indonesia
The Indonesian government will probably delay a sale of its
stake in the nation's second-largest state bank following the
recent revelation of alleged lending fraud, a Cabinet minister
said on Saturday.
The government planned to sell some of its 98 percent stake in
Bank Negara Indonesia (BNI) in the first quarter of next year.
"We are not going to do that if we are not ready. Who will buy
the shares?" Minister of State Enterprises Affairs Laksamana
Sukardi said on the sidelines of a business conference on the
Indonesian Island of Bali.
The scandal allegedly involved the issue of approximately
US$200 million in letters of credit by institutions in Kenya,
Switzerland and the Cook Islands to cover exports by Jakarta-
based companies.
A Jakarta branch of BNI issued export credits to the
companies, but they never made the exports, police said.
Bank Negara Indonesia acknowledged in October that it could
lose up to half its forecast profits this year because of the
scandal.
The government will reshuffle BNI's top management Dec. 15,
although it is still unclear who will be sacked. Laksamana said
some BNI directors recently tendered their resignations, but the
government would decide later whether to accept them.
Indonesia has sold stakes in several state-owned companies
following the 1997-98 Asian financial crisis to help finance its
budget deficits.
This past week, the fourth-largest state-run, Bank Rakyat
Indonesia, announced that it faces potential losses of Rp 294
billion ($35 million) because three of its branches provided
credits backed by fictitious deposits in the bank.
The scandals highlight the weakness of internal control
mechanisms in state banks, where corruption remains a problem.
"The state-owned enterprises are such a rampant breeding
ground for corruption," Laksamana said.
He said selling stakes in state companies to private investors
is one of the most effective ways to tackle corruption.
"Once there's substantial private ownership of the (state-
owned) enterprises, the new management will be less tolerant of
having their revenues skimmed or squeezed," Laksamana said.