Louise Williams, Jakarta – An Indonesian court has blocked the liquidation of a bank owned by President Soeharto's half brother, Mr Probosutedjo, which was ordered closed two months ago in the first round of reforms under the International Monetary Fund's $US38 billion ($58.5 billion) rescue package.
The ruling is a blow to the reformist Finance Minister, Mr Mar'ie Muhammad, who had made a point of liquidating several banks with links to the Soeharto family.
But it also shows how Indonesia's economic crisis is unravelling cosy relationships within the political and business elite, which had enjoyed privileged access to financial resources and contracts during three decades of steady growth.
To help save his Bank Jakarta, Mr Probosutedjo publicly claimed it had been included on the liquidation list "because it did not have enough money to maintain a relationship with Bank Indonesia, the Central Bank".
On Monday, police announced that three of four sacked Bank Indonesia directors had been formally charged with corruption over a $US375 million loan scam to ailing banks which avoided liquidation.
Police also say they are investigating the massive fire in the central bank's new headquarters in Jakarta early last month, which cost 15 lives.
A massive collapse in international confidence in the Indonesian economy has seen almost 60 per cent wiped off the rupiah since mid-year and almost 40 per cent off the share values, and commentators have repeatedly pointed to deep-seated nepotism and corruption, alongside the large debt burden, as a barrier to recovery. In the search for scapegoats, damaging allegations of multi-million dollar corruption within Government institutions are being exposed.
So far 35 people have been arrested for alleged involvement in the Bank Indonesia fraud which police said included fake loans, commercial papers and deposits to five ailing private banks.
But the corruption issue is a can of worms in a nation which has an economy based on a tight nexus between political power and business.
In November the workers' insurance company, Jamsostek, was forced to admit it paid up to $US2 million in bribes to members of parliament to have them pass labour legislation which limits the rights of workers to strike.
In another scandal, Jakarta Airport custom officials seized large quantities of baggage belonging to wives of politicians following a bargain-hunting trip to Bangkok, allegedly paid for using government funds.
Yesterday, the Manpower minister, Mr Abdul Latief, was in the spotlight, denying he had improperly collected levies from overseas workers. He earned enough money of his own not to have to resort to taking public funds, he said.
Foreign investors are also jittery over the re-introduction of several large projects originally cancelled under conditions attached to the IMF package.
In Mr Probosutedjo's case, the Jakarta State Administrative Court ruled that Bank Jakarta may remain open pending a final ruling on the court challenge against the liquidation order. The decision overturns the order by the Finance Ministry to close the bank on November 1.
In November President Soeharto's son, Bambang Trihatmodjo, withdrew his legal challenge against the liquidation of his 25 per cent-owned Bank Andromeda "in the national interest", after admitting he had broken the law by exceeding the legal lending limit to prop up one of his own industrial ventures.
Bambang was, however, permitted to acquire another bank, Bank Alfa, and to transfer the assets of Bank Andromeda to it.
Mr Probosutedjo said yesterday that the court was not influenced "from outside", and, like Bambang, he had been offered a replacement bank, but had refused in favour of the court challenge.
The US ratings agency Standard and Poor's has lowered Indonesia's long-term foreign currency rating from BB+ to BBB-, and its local currency rating from A-to BBB+.
The agency said the action reflected the Indonesian Government's "diminished fiscal and balance of payments flexibility".