Ni Komang Erviani and Andra Wisnu, The Jakarta Post, Denpasar | Wed, 02/25/2009 3:17 PM
The police had found a disturbing discrepancy concerning the financial assets of the Develop Karangasem Cooperative (KKM).
The major local co-op was shut down by the police last week over suspicion it was running a Ponzi-like scheme.
"Up to this day, the combined value of the assets we have seized and the bank's accounts we have frozen are worth Rp 312 billion. Meanwhile, the total amount of funds deposited by KKM's 61,000 members should reach more than Rp 521 billion," Bali Police chief Insp. Gen. Ashikin Hussein announced Tuesday
"So, there is a discrepancy of more than Rp 210 billions, that's the amount of fund that hasn't been accounted for, yet," Hussein said as he briefed the province's top leaders, including the governor, the speaker of the Provincial Legislative Council and high-ranking officials.
The police have seized Rp 282 billion in cash, 22 kilograms of gold bars and jewelry, and hundreds of automotive ownership titles from the safes at the co-op's main office in Amlapura, Karangasem during a raid Friday. Later on, the police froze the co-op's accounts at BNI, BRI and BPD banks.
Hussein promised his officers would do their best to track down the "missing" fund. However, he believed it would be very difficult to reclaim all the deposits the KKM's members had entrusted to the co-op.
"We estimate that each member will receive up to 80 percent of his total saving when we started the process of returning the seized fund and assets to the public," he said.
The Bali police closed down the Karangasem-based KKM after learning that the co-op offered an incredulously high interest rate of 150 percent to any deposit made by its members. The business started up in 2006.
The closure has triggered a public outcry after members of the co-op lambasted the police's move and demanded the co-op to be reopened. Bali Police chief said the action was necessary to prevent greater loss in the future.
"We have monitored the co-op's operation since the end of last year and we are convinced that it must be a fraud," Hussein said.
The police had to move quickly, he stressed, because they suspected the co-op's operation would tank on April, right on the election month, thus, pose a major security threat to the island.
Similar schemes folded down in several areas outside Bali, inflicting significant financial losses to their investors, mostly low-income earners attracted by the high interest rate. The police have declared KKM's director, I Putu Gede Kertia, and manager I Nengah Wijanegara suspects and have placed them in custody.
Both are charged with violating Article 16, of the 1998 law on running banking operations without license from the Central Bank. The offence carries a maximum sentence of 15 years and fine up to Rp 15 billions.
During the interrogation of Kertia and Wijanegara, which was overseen directly by Bali Police Chief at the Bali Police headquarters, both men continually denied knowledge that their system would reach saturation point.
They said they only realized they would not be able to pay back their investors in the end during the police's interrogation.
