Jakarta – More than 95 percent of the 144.5 trillion rupiah (16.8 billion dollars) of central bank liquidity credits extended to Indonesian institutions between 1997-1999 were misused, press reports said Saturday.

In a report to parliament, head of the Supreme Audit Agency (BPK) Satrio Billy Yudono said the government risked losing 138.4 trillion rupiah (about 16 billion dollars) in emergency liquidity credits extended by Bank Indonesia to commercial banks between 1997 and 1999, the Jakarta Post said.

The figure accounted for 95.8 percent of the total liquidity credit isssued to 48 banks by Bank Indonesia during the period at the peak of the country's financial crisis.

Attorney General Marzuki Darusman who also received a copy of the audit report, said his office will investigate the 48 banks over the liquidity loans. "We need to study BPK's report first and, if necessary, will immediately issue a travel ban on the bankers implicated in the loan scandal," Darusman said.

Bank Indonesia acting governor Anwar Nasution pledged full cooperation of the central bank in the investigation, adding that if necessary, central bank officials suspected of implication in the scandal would be suspended.

The findings came after an audit launched in February concerning the central bank and 48 banks which received credits. Ten of the banks now have their operations frozen, 15 are in the process of liquidation, five have been taken over by the state and 18 others had their operations suspended. The audit had been ordered by the parliament.

Yudono said that 84.8 trillion rupiah of the credits were misused by the recipients while the rest were extended in violation of banking regulations. The BPK audit report showed that many of the loans were used for foreign exchange speculations, for lending to affiliated businesses and for repaying subordinate loans. Many other banks spent them on funding branch expansion, acquiring fixed assets and even for lending through the interbank market.

The audit team' chief Bambang Wahyu was quoted by the Jakarta Post as saying that none of the banks had returned their loans. "This amount [144.5 trillion rupiah] has now become the government's debt to the central bank with an annual interest of three percent," Wahyu said.

The report blamed lax supervision by the central banks for the potential losses. "The [Bank Indonesia] clearing mechanism was easier, faster and required no verification and registration," the report said. The irregularities took place as the country's banks reeled under the financial crisis which struck the region in mid-1997.