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)