TEMPO.CO, Jakarta - The Corruption Eradication Commission (KPK) has finally peeled away one of the layers that have concealed the Bank Indonesia Liquidity Assistance (BLBI) scandal for so long. Indicting the former chairman of the Indonesian Bank Restructuring Agency (IBRA), Syafruddin Tumenggung, should be the first step towards discovering what happened to the Rp147 trillion paid to 48 banks at the height of the 1998 financial crisis which brought Indonesia’s economy to its knees.
Syafruddin stands accused of misusing his authority when he issued a statement of debt settlement to tycoon Sjamsul Nursalim in 2004, despite as the KPK now claims-still owingRp3.7 trillion.The now-defunct Bank Dagang Negara Indonesia (BDNI), which Sjamsul owned received Rp47.2 trillion in liquidity assistance during the crisis. He supposedly repaid this by handing over bank assets, companies, a giant Sumatra shrimp farm, and cash.
The issuance of the settlement document was the final stage in a process in which Bank Indonesia made payments to banks laid low as a result of the rampant collusion which existed during President Suharto’s New Order era. BDNI’s practice of allocating most of its loans to Sjamsul’s own bankrupt companies was made worse than usual because of its tendency to extend credits far in excess of the maximum limit.
President B.J. Habibie’s administration made the decision to bail out the ailing banks in December 1998. To do this, it established IBRA. But during the disbursement process, many bank owners colluded with central bank officials to exploit the liquidity assistance for their own personal profit.
Syamsul was indicted and detained by the Attorney General’s Office (AGO) on April 2001, but he was released only a month later for health reasons. During Abdurrahman Wahid’s presidency, Sjamsul received permission to travel overseas for medical treatment. He has never returned.
When Megawati Soekarnoputri took over from Wahid in 2000, the tycoon managed to obtain the statement of debt settlement and with it, a formal discharge that relieved him of any legal obligations. In 2008, the AGO issued an order halting the investigation into Sjamsul who, it later transpired, had paid a hefty bribe to prosecutor Urip Tri Gunawan.
It was this that led to the KPK ultimately taking over the BLBI case. It took years for the anti-graft commission to examine all the irregularities. It actually completed its enquiries during the Abraham Samad chairmanship, but a police effort to prosecute against Samad and several of his colleagues on trumped-up charges delayed the process. It was only last week, one year after Agus Rahardjo took over as head of the KPK, that the case was finally reopened.
Given all this complexity, the caution shown by the KPK is understandable. So far, it has only indicted Syafruddin, although it is most unlikely that he acted alone in settling the Sjamsul case. There must have been meetings and consultations with colleagues and superiors.
Perhaps the reason for the KPK caution is the realization that it would open a Pandora’s box. Even decades later, the general impression is that doling out liquidity assistance was closely linked to the politicians in power. Through lobbyists, the recipients have links with people at the top in almost every successive government. They will not take this lying down.
Nevertheless, this must not lead to a slow-down in the KPK’sinvestigations. Instead, it must reexamine how debt settlement letters were issued to other bailout recipients. We know that since Megawati issued Presidential InstructionNo.8/2002, which ‘released and discharged’ BLBI embezzlers deemed to be cooperative, IBRA has issued letters to 22 debtors, allowing the AGO to also absolve them of legal charges.
Criminal law experts have long been convinced that the BLBI case is a crime, not a civil debt issue. Sjamsul and other suspects must be punished because they breached the maximum loan limit.The IBRA forensic audit team discovered fraud at BDNI, shown in the way the bank’s Cook Islands branch transferred US$607 million, or aboutRp5.5 trillion, to 10 companies owned by Sjamsul in Singapore, Hong Kong and Taiwan at the start of the crisis. The KPK could use these findings as a starting point.
If it is proven that the debt settlement documents were issued in breach of the law, the KPK and the Government will have the legal basis to seek and seize the assets of businessmen who embezzled BLBI funds, thus enabling the state to recover some of its losses. The KPK’s first step in indicting Syafruddin Tumenggung is, therefore, a step in the right direction.
*) Read the full story in this week’s edition of Tempo English Magazine
