Soedradjat named suspect in BI loan abuse

Soedradjat named suspect in BI loan abuse

Tertiani ZB Simanjuntak and Muninggar Sri Saraswati, The Jakarta Post,
Jakarta

Former Bank Indonesia governor Soedrajat Djiwandono has extended
the central bank's hall of shame after he was declared a suspect
in a Rp 19 trillion (US$2.1 billion) financial scandal involving
the central bank's liquidity credit (BLBI) funds.

Attorney General's Office spokesman Barman Zahir said on
Thursday that Soedradjat had allegedly abused his power in
extending loans to now-defunct commercial banks while he was in
office between 1996 and 1998.

State prosecutors had placed Soedrajat on the suspect list on
May 7, Barman said.

"The suspect, together with several of his directors, had
allegedly abused his authority by issuing clearance facilities or
dispensations to commercial banks receiving the emergency loans
under the supervision of the central bank," he said.

The investigators estimated that Soedradjat had caused Rp 19
trillion (US$2.1 billion) in losses to the state.

Besides Soedrajat, three central bank directors, namely Heru
Soepraptomo, Paul Soetopo and Hendrobudiyanto, will stand trial
in the same case.

Soedrajat's successor and still-incumbent BI governor Sjahril
Sabirin was sentenced in March to two years jail in another
financial scandal involving a BLBI loan for Bank Bali. Sjahril
remains free as he has appealed the conviction.

The state prosecutors will question Soedradjat, who is son-in-
law to the late economic guru Soemitro Djojohadikusumo, as a
suspect. They are now preparing the summons.

The central bank disbursed Rp 144.5 trillion in liquidity
support to 48 commercial banks struggling to overcome massive
runs during the peak of the financial crisis sweeping the country
between 1998 and 1999.

The Supreme Audit Agency (BPK) has found that 95 percent or Rp
138.4 trillion of the emergency loans had either been misused or
been extended in violation of banking regulations.

Instead of reimbursing depositors during the runs, the bank
owners used the money to speculate on foreign exchange, to lend
them to affiliated businesses or repay subordinated loans --
thanks to poor supervision from the central bank.

The public have seen several bankers brought to trial, but not
all of the court's verdicts have been popular.

Bank Aspac's owner Hendrawan Harjono and Bank Umum Servitia's
David Nusa Wijaya received one-year jail terms respectively and
were ordered to pay back the money they had misused.

But, there was a breakthrough when the Central Jakarta
District Court sentenced BHS Bank's president Hendra Rahardja to
life in prison, although he has fled to Australia and is awaiting
extradition proceedings.

Different courts in Jakarta are now hearing the cases of Bank
Modern, Bank Umum Nasional, Bank Surya, South East Asia Bank and
Ficorinvest Bank, with charges of misusing billions of rupiah in
state funds.

The prosecutors are not waiting for the fleeing suspects to
return to the country and are preparing in-absentia trials.

Also on Thursday, the Central Jakarta District Court ordered
prosecutors to bring in Bank Surya's deputy commissioner Bambang
Sutrisno and president director Adriawan Kiki Ariawan.

The court also ordered the prosecutors to contact the
Indonesian embassy in Singapore, the country where Bambang now
resides, and advertise the summons in The Jakarta Post, Media
Indonesia, Kompas and Republika daily newspapers.