Wednesday, July 15, 2009

Bank Century fraud leads to another frauds

Investigation one fraud usually leads to another fraud. Investigation on fraud at PT Antaboga Delta Securities led to other frauds at Bank Century. How about Bank Indonesia? 
When the case broke out last year, police detained Erick Adriansjah, stockbroker at PT Bahana Securities, for "spreading rumors" (through email) about liquidity crisis in five banks, including Bank Century. Bank Indonesia governor (that time) Dr Boediono ("elected" VP) described Bank Century's failure to participate in November 12, 2009 clearing as mere technical problem. But that was not the case, because few days later, Deposit Insurance Agency (LPS) takeover the bank and since then injected over Rp6 trillion to keep the bank alive until now.
Siti Fadjrijah, deputy governor of Bank Indonesia, finally disclosed after LPS action that Century's capital adequacy ratio (CAR) dropped from 14% as of September 30 to negative 2.3% on Nov 21. Century's CAR declined as the bank's largest depositors pulled out after the bank defaulted on a US$56 million loan payment. 
"Century could have paid the debt if our interbank loans ran normally. The problem is that no bank wants to lend the money to Century because of these liquidity jitters," The Jakarta Post quoted Fadjrijah that time.
Where were Bank Indonesia officers?
Century is a merger of three banks, including CIC. CIC was involved in the investigation of loan facility GSM-102, export credit facility provided by US government. The bank secured US$953.92 million from the facility. Investigators found a violation of the facility where CIC purchased credit link note republic of Indonesia (CLN-ROI) for US$225 million, of which around US$50 million was allegedly dubious. Tantular denied that in an interview with Tempo six years ago. Century's officer claimed Bank Indonesia's deputy governor Aulia Pohan was the once who signed the CLN-ROI deal. Pohan, whose daughter is married to President SBY's son, is named a suspect in a bribery scandal.
It's not clear until now, despite the fact that CIC had repaid the USDA facility, why Bank Indonesia picked CIC as the partner bank for USDA's facility.
Boediono said Century was the only problematic bank at the moment and he didn't see other banks could fall into the same problem only to see another scandal later that month in Lampung (Tripanca Bank). Some of the owners (Tantular in Century and Sugiharto in Tripanca) have been detained. But those with funds at both banks have been busy to recover losses and release the "frozen" assets under investigation.
Corruption Eradication Commission (KPK) knew these "businesses" could generate "fees" for those having access to the assets. That's probably why they wiretapped some people, including police officers. The wiretapping led to rumors that police asked for "something" in releasing Budi Sampoerna's US$200 million funds in Bank Century (according to Century CEO Maryono in media reports today, not US$300 million as reported earlier). Police complained about this. But anti-graft movement consider KPK's wiretapping as a standard operation. ICW even fired criticism towards SBY's statement about this when he said "focus on prevention, prevention, and prevention, not "trapping" (someone)".
Zainal Arifin Muchtar, director anti-corruption research center at Gadjah Mada University, said police should be open to be grilled/examined by other institutions, including KPK. Muchtar condemned National Police Chief Bambang Hendarso for his statement as if nothing happened in the Bank Century fraud investigation. 

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