State banks criticized for failure to salvage Kanindo

JAKARTA (JP): Economists yesterday criticized state banks for having failed to salvage the debt-ridden textile manufacturer PT Kanindo Success Textile prior to the emergence of its financial difficulties.

"The failure indicates that the creditor banks have no good loan supervision mechanisms," economist Anwar Nasution told a one-day seminar on the new tax bill yesterday.

"I would say that the state banks should be more responsible for the non-performance debt of Kanindo, considering that the banks should have made examinations prior to the financial crisis," he said.

"I cannot imagine why the banks did not take strict measures against Kanindo's management when they found that the company was facing a financial fiasco," he said.

The state banks Bapindo and Bank Bumi Daya are reportedly among the creditors of Kanindo's business.

"With Kanindo's bad debt, the public may think about the possibility of collusion between the executives of the banks and Kanindo," Anwar said.

Sjahrir, who chaired yesterday's seminar, said that the banks should be held responsible because they were aware of Kanindo's financial problems.

The company was reportedly acquired by the Texmaco Group and the Association of Indonesian Batik Cooperatives (GKBI), but an industrial source said this week that Johannes Kotjo, a former executive of the Salim Group, is likely to take over the company.

The chairman of the economic and trade consulting company Econit, Rizal Ramli, said yesterday that any companies trying to salvage Kanindo should not use funds from state banks.

He said that using new loans from state banks to salvage Kanindo's operations may create another problem.

Minister of Finance said this week that state companies were not allowed to get involved in helping revive Kanindo.

Ramli expressed concern that Robby Tjahjadi, chairman of the Kanindo Group, has disappeared. "I have been informed that a Bank Bumi Daya director went to meet with Robby in Singapore." (fhp)