VP admits family firm debtor at Bank Mandiri

Rendi A. Witular and Eva C. Komandjaja, The Jakarta Post, Jakarta

Vice President Jusuf Kalla acknowledged that a cement company owned by his nephew, PT Semen Bosowa, was a debtor at giant Bank Mandiri, but insisted the company would have no problem servicing its loan.

"I do not have a direct relation with Bosowa although it is owned by my nephew. I have seen the (company's) 2003 (financial) figures ... there is no problem," he said on Friday.

He said the debt fell under the level 2 category (special mention), meaning the company had no serious difficulties in servicing the loan.

A level 5 loan is categorized as bad debt.

There is an ongoing investigation into an alleged lending scandal at state Bank Mandiri. The Attorney General's Office is currently focusing its probe on loans given to five companies, but prosecutors have said they will expand the investigation to look at more than Rp 12 trillion worth of loans channeled to 28 companies. A source said Bosowa was included among these 28 companies.

The Attorney General's Office opened an investigation after the Supreme Audit Agency released the results of its 2004 audit of Bank Mandiri. Prosecutors say they are investigating alleged irregularities in lending practices at the bank.

The Attorney General's Office has summoned top Bank Mandiri officials for questioning, including president ECW Neloe, but has not named any of these officials as suspects in the case.

Prosecutors have named four suspects, all top officials at companies that received loans from Bank Mandiri.

The case has been headline news for days, with some of the companies targeted by Attorney General's Office linked to high- profile figures, including top government officials and businesspeople.

Kalla said the government would not protect anyone guilty of breaching banking regulations.

Asked about the possibility of a management reshuffle at Bank Mandiri during the annual shareholders meeting on May 16, Kalla said reshuffles at state enterprises had to be based on performance reviews conducted by a joint team that included the President, the Vice President and three related ministers.

"Reshuffles are not based on likes or dislikes," he said.

On Friday, the Attorney General's Office summoned Bank Mandiri vice president I Wayan Pugeg and Hasyim Sumiana, a director at TV broadcaster PT Lativi Media Karya, one of the five companies at the center of the Mandiri probe. Prosecutors said the two were questioned as witnesses.

However, reports say the Attorney General's Office will name more suspects in the case next week.