News Focus : Indonesia`s bank liquidity credits trap law enforcers

For a long time, the public has been holding the belief that legal institutions in Indonesia, a country rated as one of the most corrupt nations in the world, are home to corrupters.

Thus, it came as no surprise, when the State Audit Board (BPK) came up two or three years ago with a report that Rp31.5 billion of Bank Indonesia (BI)`s funds had flowed to members of the House of Representatives (DPR), and another sum amounting to Rp68.5 billion were cashed through several checks and transferred to individual law enforces at the Attorney General`s Office (AGO).

The money was transferred through a middleman in an effort to stop the legal process that befell BI officials involved in BI`s liquidity assistance (BLBI) case.

On Sunday (March 2) at 4:30 pm, KPK agents caught Urip Tri Gunawan red-handed receiving a bribe of US$600,000 from AS in a house in South Jakarta. Gunawan is the former head of a team of 35 prosecutors that had investigated a Bank Indonesia Liquidity Assistance debtor`s case.

The BLBI refers to emergency liquidity credits extended by BI, the central bank, to commercial banks during the financial crisis which began in mid 1997. The credits were extended under the government`s blanket guarantee program. Of the Rp144.5 trillion of BLBI loans issued since 1997, Rp51.7 trillion had turned bad.

The government had since tried to solve the BLBI problem but has met with still unsurmounted difficulties to fully recover the state assets. Though some of the bad debt cases have been settled, others remained unresolved. The amounts of the recovered as well as the yet-to-be recovered credits even remained unclear.

One version mentioned the result of audits by the State Audit Board (BPK) which put the amount of the bad BLBI debts at Rp2.297 trillion.

But according to the House`s BLBI inquiry team, the BLBI credits plus other funds provided in connection with the policy then adopted to restructure national banks had cost the state Rp702.5 trillion, of the amount, Rp144.5 trillion were BLBI credits.

Amid effort to solve the BLBI problem, prosecutor Gunawan was arrested, allegedly linked to a BLBI case. This was a big shame to the government. KPK agents caught him red-handed receiving a bribe amounting to US$660,000 from a lady known by her initials as AS in a house in South Jakarta. It was found later, based on the account of the chief of the neighborhood association, Sambiyo, that the house belonged to Sjamsul Nursalim, a BLBI debtor.

The arrest was made only two days after the Attorney General`s Office announced that it had terminated its investigation into the BLBI cases involving the owners of Bank Central Asia (BCA) and Bank Dagang Nasional on the ground that its investigators had not found any indications of corruption in the bankers` efforts to settle their debts to the state. The prosecutors` investigating team was also dissolved.

Lawmaker Aulia Rahman said ...