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November 30, 2000

From Our Correspondent: Hirohito and the War
A conversation with biographer Herbert Bix

From Our Correspondent: A Rough Road Ahead
Bad news for the Philippines - and some others

From Our Correspondent: Making Enemies
Indonesia needs friends. So why is it picking fights?

Asiaweek Time Asia Now Asiaweek story

OCTOBER 8, 1999 VOL. 25 NO. 40

The Truth About Bank Bali
It's still under wraps, stirring fears of cover-up

Will the whole truth about the Bank Bali scandal ever come to light? And will anyone be punished? For those who had hoped there would be speedy justice in the $70-million anomaly, events last week were not encouraging. The state prosecutor's office in Jakarta has rejected dossiers filed by police on 10 people suspected of involvement in the illicit payments, due to a "minor technicality." Among them: former bank president Rudy Ramli, four former directors and senior managers, two deputy chairmen of the Indonesian Bank Restructuring Agency (IBRA), and two businessmen linked to President B.J. Habibie's inner circle.

Also last week, Satrio Billy Yudono, chief of the Supreme Audit Agency (BPK by its Indonesian initials), said he would not make public a 123-page report on the scandal submitted by auditors PricewaterhouseCoopers (PWC) in early September. This despite pressure from both the International Monetary Fund and the World Bank, which have suspended loans to Indonesia over the controversy. Yudono cited banking secrecy laws as a reason for giving the PWC report only to the police. Instead, a 36-page summary - which does not name names - has been made public.

Is there a cover-up afoot? Many Indonesians are asking that question more and more insistently. The scandal centers on the payment of 546 billion rupiah to Era Giat Prima (EGP), a company owned by a Habibie-linked businessman. It was a commission for getting IBRA to pay Bank Bali some 904 billion rupiah owed by a bank taken over by the agency. There have been allegations that Habibie's camp used EGP to raise funds for presidential polls.

"The government is putting its own political interests ahead of national interests," says Sri Adiningsih, an economist at Gadjah Mada University. "There can be no economic recovery without action on this," adds Pande Raja Silahlahi, an economist at the Center for Strategic and International Studies. Besides the suspension of IMF and World Bank credits, the scandal is holding up IBRA's program of recapitalizing and selling off troubled institutions -vital to Indonesia's economy.

Parliament has issued its findings, including a list of high officials linked to the scandal, based partly on a testimony by Bank Bali's Ramli. He said the head of the Supreme Advisory Council, Arnold A. Baramuli, and State Enterprise Minister Tanri Abeng were involved. He also spoke of a journal that recorded meetings of Bank Bali executives, senior officials and Habibie confidantes. It supposedly named Finance Minister Bambang Subianto and Bank Indonesia Governor Sjahril Sabirin.

The parliamentary commission and a special investigative team formed by the House of Representatives have urged President Habibie to immediately suspend senior officials involved. Parliament itself is to call for the erring bureaucrats to be fired. "We recommend some dismissals of senior officials," says Lili Asdjudiredja, who heads the special investigative team. Bank Indonesia deputy governor Miranda Goeltom told reporters: "There must be no cover-ups. This must be resolved in a credible way."

BPK chief Yudono contends there are "many serious mistakes" in the PWC report. The firm had reportedly audited many personal banks accounts with no connection to the Bank Bali affair. Ichsanuddin Noorsy, a member of the House special investigative committee, would like to judge for himself. He points out that both the Constitution and the central bank law require the audit agency to submit its report to the House. Meanwhile, consulting firm Ernst & Young has been hired to audit 15 trillion rupiah ($1.8 billion) in outstanding claims on 10 other banks. One question already being asked: Will that report be kept under wraps as well?

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