Bill Guerin, Jakarta – Judges at the South Jakarta District Court have jailed a swindler for life for his part in the embezzlement of Rp1.2 trillion (US$126 million) from state-controlled Bank Negara Indonesia (BNI). The sentence – the only salutary life sentence to be issued during President Susilo Bambang Yudhoyono's administration – comes as a major boost to the credibility of the president, who has vowed to fight corruption and boost investment in the country.

On Wednesday, the panel of judges, presided over by Judge Roki Pandjaitan, found Adrian Waworuntu "legally and convincingly guilty" of the criminal act of corruption by receiving Rp1.2 trillion from fictitious letters of credit. The judges also ordered the defendant to pay a restitution of Rp300 billion to the state and fined him Rp1 billion.

Only days after being installed as president, Yudhoyono urged Attorney General Abdul Rahman Saleh to handle major outstanding court cases quickly, including cases of graft, and reportedly asked for periodic updates on the status of major cases, such as the BNI fraud.

"I fully trust you to deal with such cases completely, and you have to trust me as well," Yudhoyono reportedly told Saleh.

The scandal at BNI, the country's second-largest bank in terms of assets, first made headlines in October 2003. The bank's Kebayoran Baru branch in South Jakarta had granted export credits to subsidiaries of the Gramarindo Group, a group holding company partly owned by Waworuntu, using 41 letters of credit (L/C) issued by banks in Kenya, Switzerland and the Cook Islands as collateral.

The bills attached to the L/Cs were fictitious, as the goods were never imported, but the branch went ahead anyway and disbursed the credits, between December 2002 and July 2003, without conducting any formal assessments or checks.

No shortage of laws

Numerous existing laws allowed police, prosecutors and judges to go the last mile in pursuing the case. They include Laws No 3/1977, 31/1999 and 20/2001 on corruption, article 263 of the Criminal Code on document forgery, Law No 10/1998 on banking and Law No 15/2002 on money laundering.

Pandjaitan, reading from the verdict, said the judges had decided to impose the heaviest possible sentence as the defendant's acts had "severely hurt the country's economy and the nation's morals".

"Those people involved in corruption should be punished as severely as possible because the act of corruption has been proven to turn the country poor," the judge said.

The credits went to PT Petindo and the Gramarindo Group. PT Sagared is the holding company for all the subsidiaries of the Gramarindo Group. The subsidiaries implicated in the scandal are PT Bassomasindo, PT Bhinekatama Pacific, PT Gramarindo Mega Indonesia, PT Magnetique Usaha Esa Indonesia, PT Triranu Caraka Pasifik, PT Pan Kifros, PT Ferry Masterindo and PT Metrantara.

The court said Waworuntu had acted as an investment consultant for Gramarindo and these subsidiaries. He also held shares in some of them, though the companies were seen simply as fronts for the grand scam. When the verdict was announced, Waworuntu looked shocked and said he would appeal. His lawyer, Yan Juanda Saputra, accused the judges of ignoring the facts presented during the case and merely siding with the prosecution. Safety in Singapore

The main suspect in the case, Maria Pauliene Lumowa, is still at large. Lumowa, a Dutch citizen and a commissioner at Gramarindo, left the country before the investigation began and is reportedly living in Singapore.

The government is unable to bring her back into the country because Indonesia does not have an extradition treaty with Singapore. The chairman of the Corruption Eradication Commission (KPK), Taufiqurrahman Ruki, had earlier called for an in absentia trial for Lumowa so the government could recoup the bulk of the money. He argued that by holding such a trial the government would have a legal basis for an immediate move to seize all of Lumowa's assets, including the flow of funds on her behalf.

"It seems the efforts to get her back here are difficult as she is not an Indonesian citizen, but we could ask for an in absentia trial that will provide a legal base to seize her assets," Ruki said.

Unproven political aspects

Alleged political dimensions to the case surfaced just as campaigning for last year's presidential election got under way. Rumor had it during that time that three presidential candidates from the opposition Golkar Party received money from individuals implicated in the scandal.

Golkar Party chairman at the time, Akbar Tanjung, coordinating minister for people's welfare Jusuf Kalla, now the country's vice president, and the new leader of the Golkar Party, General Wiranto, all denied the allegations.

A letter leaked to the press written by Edi Santoso, foreign customers' division head at BNI's Kebayoran Baru branch, stated that, together with suspected business persons, Santoso had met with Wiranto to discuss the general's plan to run for the presidency. Wiranto quickly denied this, saying he did not know Santoso and had no relations with any of the suspects in the BNI case.

Help readily available

Waworuntu was first detained last year, but was released when state prosecutors rejected the initial dossier presented against him by police as incomplete. He later managed to sneak out of the country and fled to the United States, despite a travel ban imposed on him, raising suspicions that high-ranking police officers were involved in his escape.

Brigadier-General Samuel Ismoko, head of the fraud squad, was removed from his post in October after media reports that he had taken a bribe worth $20,000 from Waworuntu to help the latter flee the country. Later that month Waworuntu surrendered to police in the North Sumatra capital Medan, after being on the lam for more than a month.

Earlier, a police disciplinary hearing had imposed a one-year suspension on Ismoko for giving special treatment to several suspects in the BNI case. But the hearing was unable to prove that he had accepted a bribe.

Not the first, nor the last

The South Jakarta District Court has so far convicted 11 of 19 suspects in the case. Waworuntu is the ninth to be jailed. Among the others are Ollah Abdullah Agam, Aprilla Widata and Adrian Pandelaki, all of whom were sentenced to 15 years in prison; Richard Kountul received 10 years; and Titik Pristiwati was sentenced to eight years. BNI's Kebayoran Baru branch head Koesadiyuwono received a 15-year sentence, while Santoso, like Waworuntu, was sentenced to life.

Last November another defendant, John Hamenda, a director of PT Petindo, was sentenced to 20 years in jail and fined Rp1 billion. Trust financial and legal magazine was fined Rp1 billion (nearly $115,000) by the Central Jakarta District Court for discrediting Hamenda and his company in an article published in its October 1-7, 2003, edition titled, "A gang of thieves hits state Bank Negara Indonesia".

Hamenda's conviction followed a string of earlier verdicts handed down to bankers and others who were implicated in cases for misusing state funds. Last July, for example, two former branch managers of another state bank, Bank Rakyat Indonesia, and two businessmen were sentenced to jail after being declared guilty in a $21 million scandal. In the same month, the Central Jakarta District Court also sentenced Yosef Tjahjadjaja to 11 years in prison for his part in a state-owned Bank Mandiri loan scandal that involved Rp120 billion of state funds.

On track

Notwithstanding the widely acknowledged improvements in Indonesia's banking sector since the 1997 Asian financial crisis, the fact that this particular embezzlement crime, made possible by help and cooperation from bank insiders, stemmed from a lack of supervision of just two individuals – one of them the branch manager – highlights the continuing need for oversight, supervision and risk management in Indonesia's banking system.

The Yudhoyono administration has committed to continuing to reform the country's financial sector, including improving its regulatory framework. Such reform, however, will take time.

Although pledging to bring the country's endemic corruption to an end may capture the public's imagination, it will take more than just one such example of severe punishment under the Yudhoyono administration to restore police and judicial credibility in the eyes of the world, let alone among Indonesians themselves. Yet if other large-scale, high-level corrupters are to be vigorously prosecuted and, on conviction, given severe sentences, Indonesia's perception in international eyes as a corrupt country may soon be on the wane.

This could generate positive spin offs for trade, tourism and investment for a country led by a president who swept to victory with one of the strongest mandates of any recently elected democratic world leader.

[Bill Guerin , a Jakarta correspondent for Asia Times Online since 2000, has worked in Indonesia for 19 years in journalism and editorial positions. He has been published by the BBC on East Timor and specializes in business/economic and political analysis in Indonesia.]