Tertiani ZB Simanjuntak

Tertiani ZB Simanjuntak
The Jakarta Post
Jakarta

Prosecutors are set to summon Minister of Finance Boediono in
connection with the Bank Indonesia liquidity support (BLBI)
scandal.

The first hints emerged from the Attorney General's Office
here on Monday that Boediono would be summoned as a witness as he
was one of the BI board of directors who approved the loan
facilities to struggling banks between 1998 and 1999.

Deputy Attorney General for Special Crimes Haryadi Widyasa
confirmed that his office was currently assessing Boediono's role
in the scandal, which has already led to the prosecution of his
former boss, former central bank governor Soedrajat Djiwandono,
and three senior BI officials.

Soedrajat was declared a suspect in early May for allegedly
abusing his power by extending the emergency loans to 48 now-
defunct commercial banks.

Three fellow BI directors -- Heru Soepraptomo, Hendrobudiyanto
and Paul Soetopo -- are already facing separate trials on charges
of breaching banking regulations.

The three had led a unit responsible for supervising banks
that ran into financial trouble during the peak of the economic
crisis. They allegedly failed to stipulate clearly the
requirements for obtaining the funds that were later disbursed
without proper procedures being followed.

Deputy Attorney General Haryadi on Monday assured reporters
that a "team of investigators will set a date for questioning
Boediono again."

Speaking at a retirement party for Assistant Attorney General
Soeparman, Haryadi said investigators would seek presidential
approval to question the minister.

Boediono is known to be one of those who attended two key
meetings of the board of directors on Aug. 15 and 20, 1997. Also
present at the meetings were Soedrajat and the three other
defendents.

The meetings decided that the central bank would disburse
state funds to banks that were facing massive runs in order to
restore public confidence.

During the monetary crisis, the government channeled a total
of Rp 144.5 trillion in liquidity support funds to commercial
banks.

The Supreme Audit Agency (BPK) later found that 95 percent of
that amount, or Rp 138.4 trillion, had either been misused or
been extended in violation of banking regulations.

The BPK laid the blame for the malfeasance on the poor
oversight exercised by the central bank.

Haryadi claimed that only three of the 48 banks
had not yet been thoroughly probed by investigators since they
started their work in 2000.

But he said many of the investigations had now been suspended,
pending final decisions by senior economic ministers grouped in
the Financial Sector Policy Committee (KKSK) regarding debt
settlement programs designed to recover state losses.