Senin, 27 Oktober 2008

INDONESIA TRYING TO SAVE AILING INDOVER BANK

By Andi Abdussalam

     Jakarta, Oct 26 (ANTARA) - While calls for investigation into possible irregularities in the Netherlands-based Indonesische Overseas Bank (Indonver) are being raised, the Indonesian government is seeking a 546 million euro bailout for the ailing Bank Indonesia (BI) subsidiary.

        A court of law in the Netherlands had since October 7 frozen Indover Bank's operations. The Indover Bank's operations were frozen by the court after the bank failed to honor obligations worth US$92 million.

        The freeze was imposed following liquidity problems facing the bank after a turmoil struck  the money market as a result of the global financial crisis.

       Apart from the financial crisis, however, a legislator of the Democrat Party, Vera Febyanti, suspected that the irregularities had caused a problem to the bank, calling for an investigation of Indover for an alleged financial scam that had brought it to the brink of bankruptcy.

         "Indover must be investigated because many irregularities and instances of embezzlement with legal implications have happened in its operations. Criminal acts have been committed," Very Febyanti said on the sidelines of a working meeting of the House of Representatives (DPR), BI and the government this week.

         Bank Indonesia Governor Boediono agreed that an investigation  on Indover Bank should be conducted to uncover financial irregularities in the ailing bank.

         "We don't the investigation, because it needs to be conducted," Boediono said after a closed-door meeting with  Commission XI of the House of Representatives (DPR) at Parliament Building.

         "The details of the investigation can be determined later on. The most important thing now is that DPR has agreed to the bailout (to rescue Indover)," he said.

         The government hoped that the central bank's subsidiary in the Netherlands would be salvaged from bankruptcy.

         After a two-hour closed-door meeting with Bank Indonesia (BI) Governor Boediono and Finance Minister Sri Mulyani, the House of Representatives eventually agreed to channel a 546 million euro bailout or about RP7 trillion to save Indover Bank.

         "The presence of Indover Bank should be maintained because it  may cause a systemic impact if liquidated. But we still ask for an investigation into the bank in case of it had  violated the law," a member of the House's Commission XI which deals with financial affairs, Awal Kusumah, said.

         Awal said the approval was okayed after making various considerations which were not merely for the sake of Indover Bank, but in a broader scale for the national economy as well.  
    BI Governor Boediono after the meeting told the press that he warmly welcomed the decision of the House's commission XI. Should Indover Bank be liquidated, it will cause a negative impact on the national economy especially its financial sector.

         In the meantime, Vice President Jusuf Kalla hailed the decision to provide a bailout of Rp7 trillion for Indover Bank, saying it was made in the framework of saving state assets.

        "Indover Bank belongs to Bank Indonesia (BI), which means that it is state money. If the bank is declared bankrupt it means not saving state assets. So the move is aimed at saving state assets," he said after a Friday prayer.

         The vice president firmly said that the bailout fund must be provided through the existing mechanism and regulations.

         "Basically we agree to bailout Indover Bank, but those who have made a mistake would still be examined," he said.

         Boediono said if Indover Bank was not saved it would affect the national economy especially the financial sector. It among other things could disrupt the flow of funds to the country and affect transactions such as exports and imports causing a tight monetary situation and others that would in turn hinder real sector development.

          He assured he would adhere to all the relevant laws in his efforts of saving Indover Bank including investigating possible violations of banking practices that had led to the bailout.

          An approval was needed from the House of Representatives because Bank Indonesia as the shareholder could not just give the funds to the bank just like that.

          Article 77 of Law Number 33 of 1999 that has been revised into Law Number 3 of 2004 on Bank Indonesia, states Bank Indonesia has to divest Indover Bank.

          A curator appointed by Bank Indonesia is currently handling the settlement of Indover bank problems and in carrying out its task  fully adhering to the rules the Netherlands.

          In the meantime, the Attorney General's Office (AGO) said it was facing difficulties in carrying out an investigation into the Indover case due to the differences between Indonesian and the Netherlands legal systems.

          "After we studied the case, we drew a conclusion that we are facing difficulties in bringing the suspect, SST, to counrt based on  double criminality as stated in point 5, article 1 of the Criminal Code," said Attorney General's spokeman Jasman Panjaitan over the weekend.

          He said that the difficulty in bringing SST, the suspect, to court was due to the differences between the Indonesian and  Netherlands legal systems.

          Panjaiitan said that in the Netherlands legal system, the SST act is not a crime.

          "But the attorney general has ordered the investigation of the case," he added.

(T.A014/A/HNG/a014)  26-10-2008 22:26:44

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