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Politics

Indonesia revives probe into Asian-crisis bailout loans

Former head of bank-restructuring agency a suspect

Bank Indonesia

JAKARTA -- The Indonesian anti-graft agency said it has stepped up investigations into suspected embezzlement of loans disbursed by the central bank to nearly 50 lenders in the wake of the Asian financial crisis of the late 1990s.

The Corruption Eradication Commission, known as the KPK, on Tuesday named the former head of Indonesia's Bank Restructuring Agency, or BPPN, from 2002 to 2004 as its first suspect since launching a probe three years ago into the Bank Indonesia Liquidity Support, or BLBI, program. The KPK identified him only by the initials "S.A.T."

The KPK said the suspect allegedly issued in 2004 a receipt of payment of BLBI funds to Sjamsul Nursalim, controlling shareholder of Bank Dagang Negara Indonesia, one of the many recipients of the BLBI money. The receipt was issued even though he had not paid back all of his debts, according to the agency. BPPN issued receipts for some bankers based on an instruction signed by then-Indonesian President Megawati Sukarnoputri in 2002. The document said legal charges should not continue against debtors who were cooperative with the authorities. This prompted the Attorney General's Office, which investigated the BLBI graft case in the early 2000s, to halt its probes of several troubled bankers.

The KPK, however, believes that the receipt for Nursalim at least is unlawful and has caused the state 3.7 trillion rupiah ($277 million) in losses.

"In April 2004, suspect S.A.T., as then-chairman of BPPN, issued a receipt for [Nursalim] for the amount he had to pay to BPPN, when he still owed it 3.7 trillion rupiah," KPK Deputy Chairwoman Basaria Panjaitan said.

"We saw an abuse" of authority, she said.

Local media quickly identified the suspect as Syafruddin Arsyad Temenggung. The KPK said the receipt issuance was intended to "enrich himself or other parties," hinting that other suspects could be named as the anti-graft agency continues its probe.

Bank Indonesia disbursed 144.5 trillion rupiah in bailout funds to 48 commercial lenders to keep the economy afloat in the wake of the Asian financial crisis of 1997 and 1998, when the rupiah plunged in value against the U.S. dollar. But audits by the Supreme Audit Agency revealed that more than 90% of the funds were likely misused. The now-defunct BPPN was tasked with overseeing the restructuring process.

The crackdown on BLBI graft has intensified since President Joko Widodo took office in October 2014. A former chairman of Bank Modern, another recipient of the loans, was arrested in Shanghai last year after living overseas as a fugitive for more than a decade.

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