Sinivasan named suspect in $1.35b scandal

Sinivasan named suspect in $1.35b scandal

JAKARTA (JP): Marimutu Sinivasan, the owner of the giant
Texmaco business group, was formally named on Thursday as a
suspect in a Rp 9.6 trillion (US$1.35 billion) loan scandal at
state banks.

Attorney General Marzuki Darusman wasted no time in announcing
the decision at a media conference soon after he received the
documents relating to Texmaco's huge loan transactions from State
Minister of Investment and State Enterprises Laksamana Sukardi.

"We have been able to launch a preliminary investigation into
the case in which Sinivasan is a suspect," Marzuki said.

Sinivasan had been barred from leaving the country, he said,
adding that the travel ban had also been imposed on Sinivasan's
brother Marimutu Manimaren and Texmaco's commissioner Wairo.

"We have already notified the immigration office," he said.

When pressed if there would be other suspects, including
former president Soeharto, Marzuki said: "We can't rule out any
possibility at this stage."

Laksamana disclosed the case during a hearing with the House
of Representatives on Monday.

He said Texmaco obtained $754 million and Rp 1.9 trillion in
loans, mostly in preshipment export facilities, between November
1997 and February 1998 from Bank Indonesia through Bank BNI and
BRI, thanks to interventions from then president Soeharto.

Texmaco is a publicly listed company with interests in
textiles and heavy machinery. Sinivasan, of Indian descent, is a
close friend of Soeharto's.

Laksamana said that Texmaco used its Soeharto connection to
bend central bank rulings to give it access to preshipment trade
facilities from Bank Indonesia, and that it also used the
facilities to repay its foreign short-term debts.

Laksamana said the loans violated the legal lending limit on
Bank BNI, as well as the rule requiring prudent management of the
country's forex reserves.

As in the Bank Bali scandal, copies of some of the documents
relating to Texmaco's loan deals have been circulating among the
public since Laksamana's disclosure.

According to the copies, Sinivasan wrote a letter to Soeharto
on Dec. 29, 1997 asking for his help in acquiring full
preshipment export facilities from Bank Indonesia.

Soeharto wrote the next day to the central bank governor, in a
memo using State Secretariat stationery, which effectively
ordered the latter to act on the Texmaco request. The translation
of the note reads: "What has been reported to me and to which I
have agreed, has not yet been taken care of."

On Jan. 13, 1998, the central bank, then under governor
Soedradjad Djiwandono, extended $340 million to Texmaco through
BNI.

Sinivasan wrote Soeharto another letter on Feb. 23 asking for
an additional $200 million and Rp450 billion from BRI and BNI
respectively.

On Feb. 24, Soeharto wrote a second memo to the central bank
governor and on March 12 the central bank then gave the money
through BRI and BNI to Texmaco.

Laksmana told the media conference at Marzuki's office that he
had no political motive in uncovering the scandal and that the
goal of his office was chiefly to save BNI and clean the bank of
collusive practices of the past.

Sinivasan was not available for comment on Thursday.

He appeared before the House on Tuesday to answer Laksmana's
allegations, denying any preferential treatment and saying that
the facility had been available to other companies as well.

Separately, Anggito Abimanyu, a member of the National
Economic Council of advisors to President Abdurrahman Wahid said
there were other companies which obtained much larger sums of
money than Texmaco through corruption, collusion and nepotism
(KKN) practices.

"If the Texmaco loan affair is considered KKN, then almost all
big companies were engaged in such practices," he told reporters.

He suspected that conglomerates such as those owned by Soedono
Salim (Liem Sioe Liong), and Prayogo Pangestu might have been
involved in much bigger KKN cases.

The Texmaco case, Anggito added, was part of past excesses
when the central bank (Bank Indonesia) was totally under the
control of the government.

A new central bank law, enacted in May, provides Bank
Indonesia with total independence from political influence.

Anggito, an economist from the Yogyakarta-based Gadjah Mada
University, said he would be surprised if any of the big
conglomerates had not lobbied power holders during the Soeharto
era.

He underlined that while measures should be taken against
businesspeople involved in KKN, the government should allocate
more resources to select which of the big companies currently
mired in bad debts would be best viable for bailout programs in
order to revive the economy.

More than 5,000 medium and large-scale companies are currently
under the direct or indirect management of the Indonesian Bank
Restructuring Agency which is responsible for restructuring bad
bank loans from closed, nationalized and state banks. (rei/byg)