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Court jails bank bailout agency boss
Photo: AntaraIn a controversial verdict that may lead to further criminal investigations into government economic policies, a corruption court ruled on Monday that the former chief of a bailout agency was guilty of manipulating a commercial bank’s credit status
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Photo: Antara
In a controversial verdict that may lead to further criminal investigations into government economic policies, a corruption court ruled on Monday that the former chief of a bailout agency was guilty of manipulating a commercial bank’s credit status.
The Jakarta Corruption Court convicted Syafruddin Arsyad Tumenggung, the former chairman of the Indonesian Bank Restructuring Agency (IBRA), which was in charge of disbursing liquidity funds for ailing banks after the 1998 financial crisis, for discharging Sjamsul Nursalim, the owner of Bank Dagang Negara Indonesia (BDNI) from repaying the government, causing Rp 4.58 trillion (US$308 million) in state losses.
“[The judges hereby] sentence the defendant to 13 years imprisonment and fines amounting to Rp 700 million, with an additional three months in prison if [the defendant] does not pay the fines,” said presiding judge Yanto when reading out the verdict.
The sentence was lighter than that sought by Corruption Eradication Commission (KPK) prosecutors of 15 years in prison and Rp 1 billion in fines.
The case dates back to the 1998 Asian financial crisis when BDNI received Rp 28 trillion in Bank Indonesia (BI) liquidity support (BLBI) funds, which were disbursed by the government through the central bank to help the banks cope with massive runs during the crisis.
It was later found that 95 percent of the Rp 144.5 trillion of BLBI funds disbursed to 48 commercial banks, including BDNI, had been embezzled.
During the trial, it was revealed that Syafruddin, who was appointed IBRA chairman in 2002, sent a letter to then-coordinating economic minister and Financial System Stability Committee (KSSK) chairman Dorodjatun Kuntjoro-Jakti in February 2004, recommending the KSSK write off some of Sjamsul’s debt, claiming the decision was based on a Cabinet meeting led by then-president Megawati Soekarnoputri.
Dorodjatun later issued a KKSK decree in accordance with Syafruddin’s recommendation, while in fact, the two officials, who had attended the Cabinet meeting, knew that the meeting had never concluded or approved the writing off of the debts, according to KPK prosecutors.
The prosecutors also found that Syafruddin had cooperated with Sjamsul and his wife, Itjih S Nursalim, as well as Dorodjatun in the graft case.
Responding to the verdict, Syafruddin immediately stated that he would file an appeal.
“Even if I was sentenced to one day of imprisonment, I would [file] an appeal,” he said.
He went on to say that the letter issued was in accordance with the government’s decision at that time, that he did not cause the state losses.
“It wasn’t me. I was just implementing the government’s decisions,” he said.
Bailout decisions during the country’s economic downturns have often led to controversy as they are almost always linked to corruption allegations.
In 2014, the Jakarta court sentenced former Bank Indonesia (BI) deputy governor Budi Mulya to 10 years in prison and a fine of Rp 500 million for authorizing the bailout of Bank Century in 2008. Budi was found guilty of abusing his authority by channeling short-term financial assistance (FPJP) worth Rp 689 billion to keep the bank, now rebranded Bank Mutiara, afloat, and by falsely claiming that the bank posed a systemic threat to the country’s financial industry, making it eligible for Rp 6.7 trillion from the Deposit Insurance Corporation (LPS).
The bailout under then-president Susilo Bambang Yudhoyono, who was a year shy of seeking reelection, was so controversial that it triggered the resignation of then-finance minister Sri Mul-yani amid inquiry pressures at the House of Representatives.
KPK spokesman Febri Diansyah told The Jakarta Post the commission would study the judges’ deliberations in Monday’s verdict before opening new investigations into the BLBI.
“Prosecutors will prepare an analysis of the verdict to be delivered to [the KPK] leaders. The considerations and evidence from the ruling will be one of the bases for taking further steps [in the BLBI case], including other potential suspects,” he said.
To date, the statuses of Sjamsul, Itjih and Dorodjatun remain as witnesses in the case.
Firdaus Ilyas, research coordinator at Indonesia Corruption Watch (ICW), said the verdict would open a new chapter in the BLBLI case.
“Bailouts of banks or financial institutions are vulnerable to abuse by governments. Thus, the supervisory role of Indonesia’s central bank and the Financial Services Authority [OJK] are extremely important in preventing further damage to financial institutions,” he said. (sau)
