Rendi Akhmad Witular and Aditya Suharmoko, Jakarta – The central bank has been accused of misleading local and foreign banks by providing a guarantee letter for its Netherlands-based Indonesische Overzeese Bank N.V. (Indover) unit to get loans.

On Tuesday, Anwar Nasution, chairman of the Supreme Audit Agency (BPK), said Bank Indonesia had issued a "comfort letter" to enable Indover to easily get loans from creditors.

"The comfort letter was the key tool Indover used to get loans. Bank Indonesia should be responsible for this kind of assurance because it could not fulfill any guarantee to support Indover," he said.

A Dutch court, on an order from the country's central bank, froze the assets of Indover due to liquidity shortage after BI, a 100 percent owner of the bank, could not provide liquidity to support Indover in weathering the impact of the financial crisis.

BI claimed it was forbidden under an amendment of the Central Bank Law for it to operate a business firm effective January next year, and help for Indover would burden BI with responsibility for the bank beyond that period.

A copy of the guarantee letter obtained by The Jakarta Post on Tuesday showed a commitment from BI signed by deputy governor Budi Mulya, dated Feb. 5, 2008, for purposes used to show Indover would not be short-lived.

"Confirmation of Supporting Indover Bank. Herewith we would like to confirm that as shareholder of Indover Bank, we will continue to support the activities of the bank as long as BI owns the shares in the bank.

"In view of the forthcoming divestment of Indover Bank, it is our present intention to undertake a transfer of ownership to one of Indonesia's state-owned banks," the letter said.

Sources from foreign banks, which have loan exposure in Indover, said their senior officials were enraged at BI's decision to dissolve Indover, accusing the central bank of issuing an empty guarantee.

"BI has misled banks. We want to make one thing clear: How can we trust the central bank after this mess? They can't even clean up their own mess, how can they even tell us to act according to their standards?" said one source.

BI officials refused to comment on the issue. BI senior deputy governor Miranda Goeltom said Monday at the House of Representatives that BI was still in the process of settling the Indover affair.

Sources at Indover also told the Post that there was currently an offer from a Chinese bank to take over Indover and make use of its EU operating license, considered difficult to obtain.