Soedradjad questioned over loan scandal

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)