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AGO to target BI officials in Indover mess
An investigation into a 2001 case at the central bank’s Netherlands-based unit has reached a new point, with the probe now focusing on rooting out Bank Indonesia officials responsible for the channeling of US$1 billion in aid to the unit
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An investigation into a 2001 case at the central bank’s Netherlands-based unit has reached a new point, with the probe now focusing on rooting out Bank Indonesia officials responsible for the channeling of US$1 billion in aid to the unit.
The unit in question is the now-bankrupt Indonesische Overzeese Bank N.V., or Indover.
The Attorney General’s Office has revived the suspended 2001 investigation into the alleged lending scandal following a request from Finance Minister Sri Mulyani Indrawati, as the government seeks a connection to a recent fiasco that resulted in a Dutch court declaring Indover bankrupt.
The AGO alleges Indover’s recent bankruptcy was linked to irregularities in several previous loan agreements. It cited the case of funds distributed from Indonesia to the Netherlands that were disbursed back to Indonesian bad debtors.
Assistant attorney general for special crimes Marwan Effendy said prosecutors had suspected there were violations in the aid disbursement by BI to Indover.
“We acknowledged Indover had already collapsed by that time, but BI insisted on disbursing the $1 billion in assistance funds,” Marwan said Wednesday.
“What was behind that move? (BI) knew in the first place Indover was already bankrupt, but it insisted on disbursing the funds anyway, which eventually worsened its liquidity.”
Marwan said the office suspected Indover had continued to carry out ill-advised banking practices that eventually led to its bankruptcy two months ago.
He added the AGO would not let those responsible off the hook. “We’ll go after those involved in the disbursement, including the ones who approved the decision.”
He said prosecutors already had several names to go on, but refused to give them out, saying only that it was easy for the public to trace those individuals.
“We’ll coordinate with the police to investigate this case because we heard it has also initiated its own probe,” he added.
The investigation was revived after BI announced on Oct. 31 it would let Indover fold, following its failure to execute a planned 545.6 million euro bailout. It had earlier failed to secure written approval for the bailout from legislators before a deadline set by the Dutch authorities.
The decision to rescue Indover was driven primarily by a BI-issued “comfort letter” somehow misinterpreted as evidence of a central bank guarantee to the bank’s creditors, as well as binding the government to the bank’s obligations.
Local and overseas creditors insist BI be held responsible for leading them into the mess, in part resulting from the support letter.
The fiasco has forced the Finance Ministry to order an AGO investigation of the case, with BI also launching an internal review to resolve the mess.
In its probe in 2001, the AGO named two suspects in the case — the bank’s former president director, Sidharta S.P. Suryadi, and the former managing director of its Hong Kong unit, Permadi Gandapraja.
The two were accused of violating the bank’s prudential principals by disbursing loans without properly examining the debtors’ ability to repay.
The case then vanished into obscurity — until now.
