Two more arrested for credit scam

Two more arrested for credit scam

JAKARTA (JP): The Attorney General's Office arrested two more
former directors of Bank Pembangunan Indonesia (Bapindo),
Sjahrizal and Bambang Kuntjoro, on Monday in a major development
in the investigation of the Rp 1.3 trillion ($620 million) loan
losses at the state bank.

"Both men officially become suspects in the investigation as
of tonight," office spokesman, Soeparman, said shortly after the
former officials were admitted into the "Round Building", the
popular name for the Attorney General's Office headquarters in
South Jakarta.

"They are being charged with corruption," Soeparman said.

The two men were relieved from their posts by Minister of
Finance Mar'ie Muhammad on Friday.

Sjahrizal, was president director of Bank Tabungan Negara
(BTN), also a state bank, and Bambang was on the Bapindo board.
Sjahrizal had presided over the Bapindo board before his transfer
to BTN in January.

Both men live on the same street in the exclusive Kebayoran
Baru residential area. Sjahrizal lives at Jl. Aditiawarman No. 11
and Bambang at No. 14.

Attorney General Singgih, who was out of town on Monday, lives
at No. 30 on the same street.

The warrants for their arrest were issued on Monday morning
and the bankers were picked up at their homes by separate teams
from the Attorney General's Office at 6.p.m.

At 8.45 p.m., they arrived at the Round Building in separate
cars. They were not handcuffed.

Sjahrizal, 58, was wearing a dark red checkered shirt, black
pants and a fez. Bambang, 51, wore a white long-sleeved shirt and
dark pants.

They appeared to be taken aback by the flashbulbs and
television floodlights aimed at them and by the barrage of
questions hurled at them by journalists.

The two men had already retained the services of top law
firms.

Lawyers

Sjahrizal is represented by Harjono Tjitrosoebono, one of
Indonesia's most prominent and senior criminal lawyers. Bambang
is represented by Hotma Sitompul, who drove him to the Round
Building on Monday night. Sjahrizal came in a car belonging to
the Attorney General's Office.

"The warrants for their arrest are good for 20 days, but can
be extended by 40 days afterwards if necessary," Soeparman said.

The decision to arrest them follows the investigation of four
suspects who are already in custody in connection with the case.

The four are Eddy Tansil, the owner of the Golden Key Group to
whom $430 million in loans was extended and disbursed; Maman
Suparman, formerly deputy manager of Bapindo's Jakarta branch;
Towil Heryoto and Subekti Ismaun, both former presidents of
Bapindo.

The government is building its case against the suspects on
the basis of the 1971 anti-corruption law. Investigators have
found irregularities in the way the loans were granted and
disbursed to Tansil and believe that this would have been
impossible without collusion with Bapindo insiders.

The investigations against Tansil and Maman have been
completed and the Attorney General's Office is expected to
present their dossiers to the courts before the end of the month.

Sjahrizal, Bambang, Towil and Subekti were members of the
Bapindo board which approved the loans to Tansil in 1989. Subekti
was president at the time. A fifth member of the board, Adi
Sugondho, has not been arrested although he was questioned.

Speculation

There has been wide public speculation that the board approved
the massive loan because of pressure from people in top
positions, given Tansil's strong connections with high level
officials in the state bureaucracy.

Besides violating the credit ceiling, the loans were given in
contravention of normal banking practices, including the fact
that Tansil never formally signed the loan agreement, let alone
provide collateral.

Question marks also abound in relation to Tansil's
creditworthiness and the feasibility of the giant petrochemical
projects which the loans were supposed to have financed.

Tansil's debt, which now stands at $620 million with interest,
has brought Bapindo to the brink of bankruptcy.

Sources close to the investigation suggest that Sjahrizal, who
built his banking career at Bank Indonesia (the central bank),
had opposed giving the credit on several occasions in 1989.

Yet it was during Sjahrizal's term as president in 1992 that
the decision to extend the loans was made.

The Attorney General's Office has come under pressure from
politicians to detain the top government officials who allegedly
put the pressure on the Bapindo board, most notably Sudomo, now
chairman of the Supreme Advisory Council, and J.B. Sumarlin, now
chairman of the Supreme Audit Agency. (02/emb)