Robert Go, Jakarta – The latest Indonesian banking scandal, in which hundreds of millions of dollars disappeared into thin air, may seem like a run-of-the-mill bank-fraud case, but besides worrying potential investors, it could also affect the outcome of next year's election.
The scandal first broke two months ago after sources leaked information about alleged irregularities in transactions involving the state-owned Bank Negara Indonesia (BNI).
The police and banking regulators said that, between December last year and July this year, BNI channelled through 105 separate transactions, export credits worth a total of S$345 million to seven local companies seeking to export Indonesian commodities to Kenya and the Congo.
The companies belonging to two small groups allegedly set up for the BNI scam, supported their loan requests using letters of credit issued by banks in Kenya, Switzerland and the Cook Islands. Two BNI managers did not check the borrowers' background and the validity of their foreign letters of credit before approving the loans. This violated BNI's internal rules and Indonesia's banking laws. What was worse was that the companies never exported anything to Africa.
Although 800 billion rupiah of the borrowed money was finally returned to BNI by some of the companies through their repayments, the rest vanished. Police are tracking down those suspected of having been involved in the scam.
To date, 11 people – nine businessmen linked to the seven companies and the two BNI managers – have been nabbed and questioned by the police. They face charges of having broken corruption, banking and money-laundering laws.
The authorities have frozen and inspected at least 31 bank accounts belonging to suspects and their companies, in an attempt to trace the missing cash.
The investigation now focuses on 55-year-old Maria Lumowa, an Indonesian with Dutch citizenship, who was a shareholder at one of the companies which received BNI's money.
Chief of detectives Erwin Mappaseng said last Tuesday that Lumowa, who has been described by the local media as a plump, bejewelled woman, was hiding abroad. "We're having difficulties apprehending her. She is possibly in Hong Kong or Singapore," he said.
The scandal is hurting the bank directly. BNI top executive Saefuddin Hasan said the bank could lose as much as S$190 million this year, around half of the profits forecast. Jakarta wanted to privatise BNI next year, but lawmakers said they may now demand a delay to this process.
MP Paskah Suzetta, a senior member of the permanent parliamentary commission which oversees banking matters, told The Jakarta Post that investigations have to be completed and all guilty parties punished before legislators would allow the government to sell BNI. Edy Santoso, one of the two BNI managers arrested, wrote a confession that was widely published in the local media.
In it, he named a number of top politicians – including retired General Wiranto, a presidential candidate from the Golkar party – as parties involved in the scam. Edy also claimed to have met other politicians and Cabinet members with whom he discussed "fund-raising activities" ahead of next year's elections.
Mr Wiranto and other politicians have vehemently denied links to the case. In a press conference last week, the former armed forces commander said: "I want to reiterate once more that I have no knowledge or involvement, or benefited in any way, from the BNI scam."
Political observers noted that it remained unclear at this point the extent to which the BNI affair would turn into a political hot potato. But several argued that it could resemble the Bank Bali case, another banking fiasco that hurt Golkar's efforts to retain its hold on power before the last elections.
That case, dating back to June 1999, involved the transfer of US$78 million from Bank Bali to a company that was closely linked with the Golkar party. The money was supposedly a commission from Bank Bali in return for Golkar's help in securing payment of US$150 million in bad loans owed to the bank.