'Soeharto linked to Texmaco loans'

'Soeharto linked to Texmaco loans'

JAKARTA (JP): Minister of Investment and State Enterprises
Development Laksamana Sukardi revealed on Monday that former
president Soeharto was directly involved in the controversial Rp
9.6 trillion (US$1.35 billion) loans from state Bank BNI to
textile conglomerate Texmaco Group.

Laksamana said the hefty loans to a single business group were
made possible through the personal intervention of Soeharto.

"This is a case of national level collusion," Laksamana told
the House of Representatives Commission IX for budget and
banking.

He deplored that Texmaco got US$754 million plus Rp 1.9
trillion mostly in preshipment export facilities in stages
between November 1997 and February 1998 from Bank Indonesia (the
central bank) through Bank BNI at a time when the rupiah was
under enormous pressure.

Texmaco, he added, used its Soeharto connection to twist
central bank rulings to give it access to preshipment trade
facilities from Bank Indonesia.

"This contravenes Bank Indonesia's own rulings that allows
only post-shipment facilities.

"Worse still, Texmaco used the preshipment trade facilities to
repay its foreign short-term debts," Laksamana added.

He regretted that at a time when the country's foreign
exchange reserves were being eroded by pressure on the rupiah,
Bank Indonesia gave large dollar loans to Texmaco.

"This is also in violation of the central bank-mandated legal
lending limit by Bank BNI and the central bank ruling that
requires prudent management of the country's forex reserves,"
Laksamana said

The country's legal lending limit at that time allowed a bank
to lend to a single business group only as much as 20 percent of
its capital.

The Bank Indonesia governor at that time was Soedradjad
Djiwandono.

"There's indication that preshipment facilities were tailor-
made to accommodate the needs of Texmaco," Laksamana said.

He also said that Texmaco continued to use its influence to
prevent Bank BNI from transferring the company's loans, which had
turned sour, to the Indonesian Bank Restructuring Agency (IBRA).

Under the government bank recapitalization program,
nonperforming loans must be transferred to IBRA.

"I think the Texmaco loans must be transferred to IBRA in
order for Bank BNI to become truly healthy," Laksamana said.

The controversy surrounding the Texmaco loans is the latest
blow to the country's beleaguered banking sector following the
outbreak of the high profile, politically charged Bank Bali
scandal in late July.

Laksamana said he would soon reshuffle the management of
publicly listed Bank BNI, including replacing its current
president, Widigdo Sukarman.

Texmaco, a widely diversified group that produces textile
machinery, synthetic yarn, fabric and garments, tractors, trucks
and machine tools, is owned by Marimutu Sinivasan, a close friend
of Soeharto.

Sinivasan admitted on Sunday that the company had huge loans
from Bank BNI.

He said at a media conference that the loans were provided by
the central bank through Bank BNI in the form of preshipment
trade facilities.

"I thought at that time that there was nothing wrong with it
because it was being offered to all companies. So Texmaco took
the opportunity," Sinivasan said.

He also admitted that Texmaco used some of the BNI loans to
repay short-term debts, arguing that "there was no other way for
us to survive".

Sinivasan said that the plunge in the value of the rupiah
against the U.S. dollar in 1998 had been the primary factor which
prompted Bank BNI to exceed its legal lending limit in rupiah
terms.

He pointed out that the rupiah plunged from Rp 2,500 per U.S.
dollar before the crisis started in the middle of 1997 to more
than Rp 10,000 last year.

Sinivasan also said that Texmaco was currently in the process
of negotiating with BNI to restructure its loans, including
through a debt-to-equity swap, which would allow BNI to own up to
40 percent of the textile giant.

Separately, Bank BNI said the Texmaco loans had not been
transferred to IBRA because the loans were classified as category
four loans, or doubtful loans, while loans that must be handed
over to the agency were category five or bad loans.

There has been speculation that Texmaco prevented the loans
from being transferred to IBRA to avoid tough debt restructuring
procedures or possible litigation. (rei)