Jakarta – A director with Indonesia's central bank was jailed yesterday for three years after being found guilty of corruption in failing to properly monitor insolvent banks during the regional financial crisis.

Heru Supraptomo is the second central bank director jailed this week. Fellow Bank Indonesia (BI) supervision director Hendro Budianto was sentenced on Tuesday.

Heru was guilty of "carrying out acts of corruption" as the director of banking supervision with BI and had caused losses of 6.36 trillion rupiah (S$1.3 billion) to the state, said Judge Rukmini.

He told the Central Jakarta District Court that Heru had failed to freeze the accounts of 22 now-dissolved banks, allowing them to continue their daily operations.

The court ordered Heru to serve three years in jail and pay a 20-million-rupiah fine. He has one week to appeal the sentence, during which time he will be free.

At the height of the Asian economic crisis in 1997-1998, BI gave 144.5 trillion rupiah of emergency liquidity support to numerous private and state banks to prevent the collapse of the banking system following massive runs on deposits.

State audits have shown that more than 95 per cent of the liquidity credits were misused. Many went towards foreign exchange speculation, lending to affiliated businesses and repaying subordinate loans.

Other banks used them for branch expansion, acquiring fixed assets and even interbank lending.