Texmaco and 19 firms got special loans: BI

Texmaco and 19 firms got special loans: BI

JAKARTA (JP): Bank Indonesia's deputy governor Ahjar Iljas
said on Friday that Texmaco was among 20 exporting companies
which received a preshipment rediscount facility from the central
bank through state commercial banks in November 1997.

Iljas confirmed to Antara that some of the companies obtained
the preshipment financing facility based on memos from then
president Soeharto.

The head of the central bank's department of international
economic cooperation and trade, Hendy Sulistyowati, confirmed
that the facility was specially created in late 1997 to help
exporting companies to increase export earnings in order to
replenish foreign exchange reserves.

The central bank's executives were commenting on the
allegations that Texmaco's chairman M. Sinivasan obtained US$754
million and Rp 1.9 trillion in preshipment facilities from Bank
Indonesia through Bank Negara Indonesia and Bank Rakyat Indonesia
between November 1997 and February 1998 through intervention by
Soeharto, who resigned in May 1998.

State Minister of State Enterprises and Investment Laksamana
Sukardi revealed what he considered a loan scandal at a hearing
with the House of Representatives on Monday, and submitted
documents on the loans to Attorney General Marzuki Darusman for
further investigation on Thursday.

Marzuki declared Sinivasan a suspect soon after receiving the
documents.

Separately, Sinivasan's lawyer Adnan Buyung Nasution
criticized on Friday Marzuki's decision as too hasty and
imprudent because it was made without first questioning
Sinivasan.

Buyung wondered how Marzuki could have declared Sinivasan a
suspect only a few hours after he received documents on the loans
from Laksamana.

He expressed frustration at how Marzuki handled his client,
saying Sinivasan deserved fair treatment.

Buyung also accused the mass media of "unbalanced coverage" of
the Texmaco loan case, saying the publicity could hurt the giant
company which employs hundreds of thousands of workers.

"Once a court found Sinivasan not guilty, it might be too late
to save his company," Buyung said.

Hendy said Bank Indonesia did not face risks in extending the
preshipment facility because the loans were secured by the state
commercial banks that made the disbursements.

"If the corporate borrowers failed to repay their loans, we
simply recovered them by charging the loans against the state
banks' deposits at Bank Indonesia," Hendy added.

She said the preshipment facility could be used only for
working capital to finance exports.

"State commercial banks were liable to penalties for any abuse
of loans they disbursed to exporters." However, she did not
disclose whether any of the corporate borrowers were found to
have abused the facility.

According to Hendy, state banks were fully responsible for
assessing the loan applications from exporting companies which
intended to use the facility.

Separately, Soedradjad Djiwandono, who was the governor of the
central bank when the preshipment facility was created, confirmed
in a written interview with Kontan economic newsweekly that the
facility was established after a series of discussions involving
him, the finance minister, the trade and industry minister,
private and state bankers and many senior officials from related
ministries.

"The facility was created to help selected exporting companies
boost their exports," added Soedradjad, who is now a development
associate at the Harvard Institute for International Development
in Cambridge, U.S.

The foreign exchange market was then very thin and the dollar
supply was quite short, he said in referring to the situation
between late 1997 and 1998 when the rupiah collapsed amid the
financial contagion which began in Thailand in July 1997.

"The facility was not tailor-made to the Texmaco group but was
designed to help exporters," Soedradjad said.

Soedradjad, however, said he was not sure as to whether he had
asked Sinivasan to write Soeharto about the loan facility.

"I don't have detailed records on the Texmaco loan case, how
much were the loans and which state banks disbursed them," he
said.