Indonesia wins one in war on
corruption By Bill Guerin
JAKARTA - Indonesia has scored a major
victory in the war on corruption after the return
to the country of a crooked banker who fled before
being sentenced in absentia to eight years in
jail.
The US turned over fugitive David
Nusa Wijaya to Indonesia on January 17 after he
was located in Los Angeles four days earlier. The
two countries do not have an extradition treaty. However,
national police chief General
Sutanto, who was hand-picked last year by the
president, said Wijaya had been given two choices
by the police.
"The first was for him to
go through the legal process in the US and then be
deported, while the second was to voluntarily
undergo the legal process in Indonesia," he said.
Wijaya, a 44-year-old ethnic Chinese
wanted for embezzling about US$139 million, chose
the latter, Sutanto said. This could suggest
Wijaya believes that given time, he will find a
way to escape justice yet again. However, he may
find it much more difficult this time. President
Susilo Bambang Yudhoyono is talking tough on
seeing such criminals brought to justice.
"I don't want any extortion, backroom
deals or anything by the law enforcement people
here that would create a more difficult situation
for the judiciary," Yudhoyono warned, when
commenting on the joint operation by Indonesian
police and the US Federal Bureau of Investigation
that resulted in Wijaya's capture in San
Francisco.
Significantly, US assistance
came less than a week after Washington praised
Jakarta's arrest of suspects in the 2002 murders
of two American teachers in the province of Papua.
The case was the main hurdle to restoring military
ties between the two countries.
Once
again, as with the Papua arrests, public
statements confirm the strong relationship
developing between Jakarta and Washington. "I am
grateful to the friendly country that helped him
[Wijaya] be brought to justice," Yudhoyono said.
The US Embassy in Jakarta said in a
statement: "The US government understands that
returning fugitives and stolen assets from abroad
in corruption cases is a top law-enforcement
priority in Indonesia and looks forward to
cooperating with Indonesia in other cases in the
future."
Wijaya had been on the run since
2004, a few weeks before Indonesia's Supreme Court
increased an earlier sentence to eight years for
embezzlement in a scam linked to one of the
biggest and nastiest wholesale fraud cases ever,
the misuse of Bank Indonesia Liquidity Assistance
(BLBI) in 1997-98.
In a related
development, the owner of liquidated Bank Bira,
Atang Latief alias Lau Tjin Ho, returned to
Indonesia on Friday to face trial over alleged
embezzlement of Rp325 billion (US$34.7 million) in
BLBI.
He arrived in Jakarta from Singapore
and was immediately rushed to a hospital for an
undisclosed illness, according to Antara news
agency. Sutanto said a ban on Latief going abroad
abroad was issued in 2000 but later revoked by the
immigration office.
"He went abroad
because he felt he was being treated unfairly,"
Sutanto said. "We will try to conduct an objective
legal process and assure him that his rights will
be respected."
Of Rp325 billion Latief is
accused of taking from the BLBI fund, Rp155
billion has been returned to the state. "Latief
has taken responsibility for the remaining Rp170
billion and, most importantly, he has returned
home," Sutanto said. Latief's assets in Indonesia
have been transferred out of his name since he
left the country.
Commander Benny Mamoto,
head of the Transnational Crimes Division, said
Indonesia's "improved image" among the
international community had helped the recapture
of fugitives. "We successfully convinced the US
government about the recent improvements to our
law-enforcement system, so that they were willing
to surrender Wijaya to us."
The US is the
first foreign country to give explicit assistance
to Jakarta's hunt for fugitive criminals. It is
almost certain to result in breaking the deadlock
in negotiations with Singapore over an extradition
agreement, an essential element in Indonesia's
crusade against corruption. Wijaya initially fled
to Singapore before moving on to the United
States.
Out of harm's
way? Indonesia has extradition agreements
only with Hong Kong, Australia, Thailand and the
Philippines. Singapore has resisted such
arrangements, although Jakarta has tried to
negotiate a pact since 1973 and often demands that
the tiny island-state cease harboring criminals
and their ill-gotten gains.
Attorney
General Abdul Rahman Saleh only last week accused
Singapore of delaying a pact planned in December
by insisting that it be inked this year as part of
a Defense Cooperation Agreement between the two
neighbors. Saleh, hand-picked by Yudhoyono,
pledged last year to reopen an investigation into
the BLBI crimes and go after fugitives abroad.
Singapore's economy depends to some extent
on Indonesian cash, and Indonesians are among the
biggest buyers of private real estate there.
Jakarta has alleged that Indonesians have
transferred illegal funds to Singapore, which has
strict bank-secrecy laws and claims to have enough
safeguards to prevent the country from becoming a
haven for laundered funds.
Nonetheless,
many Indonesians alleged to have committed crimes
at home live freely in Singapore, and some have
become citizens of the tiny but wealthy republic,
which is a regional financial center.
Many
of those on the run are living in Singapore and
"if we don't have an extradition agreement, it's
very difficult to catch corruptors", Saleh told a
Jakarta Foreign Correspondents Club lunch.
Mother of all heists Wijaya, the
former head of Bank Umum Servitia, had been
convicted of involvement in a case tied to the
infamous misuse of BLBI funding. A total of about
Rp140 trillion ($13.5 billion) in liquidity
support, equal to more than half of the 1998-99
state budget, was dished out as a lifeline to 48
of the country's ailing banks during the 1997-99
Asian financial crisis to help them cope with mass
runs against them.
The Supreme Audit
Agency (BPK), in a report commissioned by the
House of Representatives, found that Rp138
trillion of the BLBI funds had been channeled by
improper procedures and then misused by the
recipient banks, mostly owned by cronies and
relatives of former president Suharto.
Instead of diligently managing the funds
to guarantee depositors' savings, bankers used
much of the money for currency speculation, loans
to affiliated business groups, and repayment of
subordinated loans, securities transactions and
even office costs.
Though the verdict
against Wijaya was based on Bank Servitia
receiving BLBI funding totaling Rp1.29 trillion,
he used the funds for the interests of his own
business group through Bank Sembada Arta Nugraha,
another bank that he owned.
The horrendous
abuse of funds was blamed firmly on weak
supervision by the central Bank Indonesia (BI). At
first the government refused to cover the BLBI
losses, which threatened to bankrupt BI. In
November 2000 the Finance Ministry and BI reached
an agreement, under which the central bank would
only have to cover Rp24 trillion, while the
government's Indonesian Bank Restructuring Agency
(IBRA) would be responsible for the remainder.
Indonesians are still paying for the
crimes of the errant bankers. The government
raised funds for the BLBI using bonds for which it
had to allocate trillions of rupiah every year to
repay principal and interest. To finance the
bonds, spending on subsidies and development
programs was slashed under an austerity drive that
hit the poor hard. Thousands of jobs were lost in
the suspended or closed down banks.
Classic example A brief look at
Wijaya's case serves to show just how easily
things went wrong when the long arm of the law
was, inadvertently or deliberately, caught
napping.
Although Indonesian law allows
courts to order any defendant at any time to be
detained to prevent him or her from absconding,
many of the corrupt managed to flee prior to
verdicts in their cases as they were not taken
into custody while on trial or awaiting decisions
on their appeals. By the time the courts had
handed down a final verdict, they had absconded to
escape imprisonment. Another common tactic is to
plead illness. And instead of insisting on speedy
prosecutions, officials continue to grant delays
to court dates and issue permits for medical
treatments abroad.
Prosecutors can do
nothing to prevent them from fleeing as only the
courts have the power to order detention of
defendants during the trial process. Meantime,
officials use paper chases to give them time to
leave the country, despite pending jail terms.
The attorney general's office blamed
bureaucratic snags for the late delivery of
documents that normally get forwarded "a day or
two" after a judgment is rendered. According to
the law, prosecutors can only execute a verdict
when they receive an "official" copy of the order
from the issuing court. In Wijaya's case they got
it only a year after the case closed. The Supreme
Court was blamed for an administrative snafu that
contributed to Wijaya's escape, as the court
verdict, handed down on July 23, 2003, was
received by prosecutors on July 28, 2004, long
after Wijaya had fled.
Deputy Attorney
General for Intelligence Basrief Arief leads a
special team set up to hunt down 13 of the
country's most wanted fugitives. Many of
Indonesia's top white-collar criminals are still
at large but Arief's official "most wanted" list
is now down to 12 names with Widaya's capture. Not
all of them are wanted for BLBI crimes.
Still on the loose (among many
others) Sjamsul Nursalim, former president
commissioner of Bank BDNI, is one of the most
notorious of the country's bad debtors. He lives
in grand style in Singapore, which is hardly
surprising considering his Rp37 trillion gift from
BLBI through his bank makes him the second-largest
recipient of BLBI after Bank Central Asia.
Samadikun Hartono is another BLBI fugitive
and a former president director of Bank Modern,
another bank that was closed. He was found guilty
of embezzling Rp169 billion and sentenced to four
years in jail; there have been no public reports
of his whereabouts.
Bambang Sutrisno and
Andrian Ariawan are also BLBI fugitives - they
were vice president and president director,
respectively, of the closed Bank Surya. Both were
accused of embezzling Rp1.5 trillion and sentenced
to life imprisonment. Both reportedly live in
Singapore.
Sudjiono Timan, former
president director of state-owned venture-capital
investment company PT Bahana Pembinaan Usaha
Indonesia, disappeared when prosecutors tried to
arrest him at his home after he was sentenced to
15 years in jail. He was involved in a Rp1.1
trillion corruption case involving the channeling
of state funds to Suharto's cronies. He is also
thought to be in Singapore.
Set up in 1993
to facilitate national development and cooperation
with foreign investors, BPUI ended up with debts
of almost $1 billion and was owed hundreds of
millions in outstanding loans by corruption-linked
tycoons.
Bill Guerin, a Jakarta
correspondent for Asia Times Online since 2000,
has been in Indonesia for 20 years, mostly in
journalism and editorial positions. He has been
published by the BBC on East Timor and specializes
in business/economic and political analysis
related to Indonesia. He can be reached atsoftsell@prima.net.id.
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