Soedradjad questioned on BLBI malfeasance
JAKARTA (JP): Former Bank Indonesia (BI) governor Soedradjad Djiwandono was again questioned on Wednesday about alleged misuse of some Rp 144.5 trillion in liquidity supports to 48 commercial banks between 1997 and 1999, Attorney General's Office spokesman Muljohardjo said.
But Muljohardjo added that the questioning was focused on Soedradjad's knowledge of the liquidity assistance channeled to Bank Modern.
"Soedradjad admitted that some Rp 766 billion out of the Rp 2.5 trillion extended to Bank Modern was misused. Instead of disbursing the liquidity assistance to reimburse depositors, the bank allocated the money for other purposes, including buying foreign currency for speculative purposes and lending to its affiliated business groups," Muljohardjo said.
Muljohardjo said that Soedradjad, who was at the central bank's helm when the alleged corruption took place, admitted that the disbursement of the emergency loans was with the consent of the central bank's board of directors and was designed to help the banks cope with massive deposit withdrawals during the peak of the financial crisis.
During the 12-hour interrogation, Soedradjad also admitted that the central bank's board of directors issued Ruling No. 30/50/DIR/UKP on Dec. 30, 1997, which extended special overnight liquidity supports on condition that the recipients should never have a negative balance at the central bank after Dec. 31, 1997.
"If the banks failed this requirement, they were given one day to repay the loans or they would be excluded from bank clearing for five days in a row. Otherwise, the banks were to be merged, nationalized or wound up.
"However, although the banks repeatedly had negative balances between Dec. 31, 1997 and December 1998, the central bank kept disbursing the loans," Muljohardjo told journalists while revealing the results of the prosecutors' interrogation of Soedradjad.
An audit by the Supreme Audit Agency (BPK) unveiled that some 95 percent of the emergency loans were either misused or extended in violation of banking regulations.
Muljohardjo also referred to BI letter No. 23/237/UPG dated Feb. 28, 1991, which stated that the central bank could only disburse three percent of its deposits as insurance during a bank run.
"But our investigation found that instead of reimbursing three percent of the deposits, the central bank channeled emergency loans amounting to as much as the commercial banks' debit balances," he said.
Also quizzed on Wednesday were two BI directors, Aulia Pohan and Miranda Goeltom.
State prosecutors also quizzed the former and active BI executives over their knowledge of the emergency loans extended to the now defunct Bank Dagang Negara Indonesia (BDNI).
This bank received some Rp 37 trillion in liquidity assistance from Oct. 15, 1997 to Jan. 29, 1999. Prosecutors found that some Rp 4 trillion of this sum was misused by the bank's director Sjamsul Nursalim, who has been named a suspect in the case.
Muljohardjo said that the disbursement of liquidity facilities to BDNI after December 1997 was based upon an agreement signed by Aulia and Miranda in their capacities as directors.
However, Miranda claimed to know nothing of the liquidity support, saying that she had just been installed as director for one day when the loan was disbursed to the bank.
"The prosecutors asked me about definitions...I didn't know anything about BDNI. It's strange I was questioned for something I wasn't involved in," she said before leaving the Attorney General's Office compound after the three-hour questioning.
The state prosecutors expect former Supreme Advisory Council chief A.A. Baramuli on Thursday for questioning as a witness in a loan scandal involving a central bank subsidiary, the Amsterdam- based N.V. Indover Bank. (bby)