T

he House of Representatives blamed recent banking woes surrounding Citibank officers on lax supervision by Bank Indonesia (BI) coupled with disobedience by Citibank, and demanded an overhaul in banking practices and regulations.

After hearings with various stakeholders, the House urged BI to immediately annul and revise current regulations, especially on debt collection that allowed the use of third-party services.

“While revising and perfecting the regulations, [we require] all banking parties to directly handle their debt collection,” the House said in a statement read by Achsanul Qosasi, the deputy chairman of the House’s Commission XI overseeing finance and national development planning, in Friday’s plenary session.

“The House’s Commission XI is very disappointed at the way Citibank collects debts, which allegedly caused the death of Irzen Octa on March 29,” the House said.

Octa, the secretary-general of the National Unity Party (PPB), allegedly died at the hands of debt collectors following his complaint over an inflated credit card bill.

The House also blamed poor supervision by BI for the alleged abuse of authority and embezzlement by senior Citibank relationship manager Inong Malinda, or Malinda Dee.

Malinda is suspected of working with former Citibank tellers to skim at least Rp 17 billion (US$2 million) from her clients at the bank.

“This case is not only detrimental to bank customers, but we fear that it will undermine public trust in foreign banks operating in Indonesia as well as the banking industry in general,” the House statement said.

The commission also urged the central bank to immediately investigate cases implicating Citibank and impose stern sanctions on the bank.

BI has instructed Citibank to freeze new Citigold service applications and to stop processing new credit card applications pending the investigation into Octa’s death.

“We also lend our support to the National Police to unearth allegations of banking crimes implicating Citibank [officers] under the prevailing law, either the Criminal Code, banking law or anti-money laundering law,” the House said.

House’s Commission XI earlier raised suspicion that the alleged embezzlement by Malinda may involve money laundering.

“The Financial Transaction Reports and Analysis Centre [PPATK] will determine whether money laundering was involved, but it looks likely,” Achsanul said Wednesday.

One indicator of money laundering, he said, was the flow of funds between accounts belonging to Malinda and her clients. “That is highly suspicious,” he added, saying that “Malinda did not act alone.”

The commission said it would require BI and Citibank to report their follow-up actions to the House recommendations within a month.

In the meantime, the House will establish a working committee to probe Citibank cases and other bank-related problems.

BI deputy governor of payment systems and banking transactions Budi Rochadi said BI had no objections to the commission’s recommendations, promising the central bank would heed them all.

“We have implemented some of the recommendations, such as freezing new applications for credit cards. Yesterday, we issued an instruction to Citibank stating that no additional cards could be issued,” he said.

Citi country officer for Indonesia Shariq Mukhtar said Citibank would be “reviewing and discussing the recommendations” passed by the House.

“With regards to Bank Indonesia’s request, we will temporarily suspend the acquisition of new Citibank credit card customers. It is business as usual for our existing credit card customers,” he said in a statement sent to The Jakarta Post. (lnd)