Soedradjad questioned over loan scandal

JAKARTA (JP): Former Bank Indonesia (BI) governor Soedradjad Djiwandono was questioned at the Attorney General's Office on Wednesday over a loan scandal which allegedly caused the central bank some US$1 billion in losses.

Prosecutor Budiman Rahardjo said the 24 questions posed to Soedradjad during the seven-hour questioning were about the latter's acknowledgement and responsibility in financing creditors through two of BI's overseas subsidiaries.

"Soedradjad was also questioned over the central bank's fund allocation policy between 1993 and 1998, when the funds were allocated. Some of the funds, for example, went to PT Bahana," he said, without elaborating.

Deputy Attorney for special crimes Bachtiar Fachri Nasution said that the preliminary investigation found that there was a connection between the disbursement of money from BI to the subsidiaries, namely Amsterdam-based N.V. Indover Bank and the latter's affiliated Hong Kong-based Indover Asia Ltd., and the bank run before the crisis in 1997.

"The investigation is to determine the exact amount of the funds disbursed to cope with the bank run," he said.

The prosecutors named two bankers as suspects last August, former president director of Indover Bank Sidharta S.P. and former managing director of Indover Asia Permadi Gandapraja.

They have been accused of violating the bank's prudential principal in extending credit by disbursing loans without properly examining the lenders' capability to repay the loans.

The money distributed to the two banks came from, among other sources, BI's foreign exchange reserves.

The preliminary investigation found that there were irregularities in several loan agreements where there was intervention from executives of the central bank and that the credits were extended to several people known as the inner circle of former president Soeharto.

Soedradjad's predecessor, Adrianus Mooy, testified last year that the credits were initially provided in order to develop the industrial sector, including the timber and forestry industry, in the eastern regions of Indonesia.

Appearing to be exhausted, Soedradjad said that as commissioner of the subsidiaries, he was being summoned to explain about the problems faced by the foreign-based banks and that there was no intervention by BI executives in the loan disbursements.

"There was no intervention... I cannot give you details of the examinations made on the lenders' capabilities, but probably later after the completion of this questioning," he told journalists before leaving the Attorney General's Office complex.

Head of the case's investigation team, Muchtar Arifin, said the prosecutors were about to leave for Amsterdam later this month to question 10 foreigners, who were once executives of Indover Bank, as witnesses to the case. (bby)