Indonesian anti-graft body drops probe into BLBI scandal. Govt forms BLBI asset recovery task force

Syafruddin Arsyad Temenggung (left), former chairman of the Indonesian Bank Restructuring Agency (IBRA), talks to his lawyer Yusril Ihza Mahendra at a hearing during his trial at the Jakarta Corruption Court in 2018. - Antara

JAKARTA (The Jakarta Post/ANN): In its latest move to chart an alternative path to resolve the long-running Bank Indonesia Liquidity Support (BLBI) corruption scandal, the government has formed a task force by presidential decree recover trillions in state assets through civil litigation.

The establishment of the BLBI asset recovery task force comes after the Corruption Eradication Commission (KPK) was unable to continue pursuing criminal accountability for the suspects in its investigation.

The antigraft body announced last Monday (April 12) that it had had dropped the BLBI probe on April 1, citing a 2019 Supreme Court ruling that acquitted one of its key suspects, former Indonesian Bank Restructuring Agency (IBRA) chairman Syafruddin Arsyad Temenggung.

The court ruled that Syafruddin’s issuance of a debt discharge letter, which released a borrower from their obligation to repay government loans taken out under the BLBI scheme, was not a criminal act, but a civil or administrative one.

The KPK petitioned the court for judicial review of the Syafruddin case, but the Supreme Court rejected the request in June 2020 on technical grounds.

The KPK has sent numerous corruptors to jail in connection with the BLBI funds, but recovering stolen state assets, particularly money that has been converted into other types of assets or moved abroad, has remained difficult.

On Monday, Coordinating Political, Legal and Security Affairs Minister Mahfud M.D. said the mandate of the new task force was to fulfill the government’s right to claim its assets from the BLBI funds.

“We seek to claim our right in relation to this civil matter because [the BLBI fund] was originally an arrangement based on civil law," said Mahfud, who is on the task force established on April 6 under Presidential Decree No. 6/2021.

“The Supreme Court has ruled that there were no criminal elements [in the BLBI case], which is why we are currently pursuing civil [litigation].” Mahfud added that the KPK’s decision to drop its investigation was a reason for the government to establish the BLBI asset recovery team.

Led by the Finance Ministry’s state assets director general Rionald Silaban, the task force has until the end of 2023 to recover the state assets, worth around Rp 110 trillion (US$7.5 billion) according to Mahfud’s estimate.

The government has yet to release the estimated value of the assets it aims to recover.

The BLBI corruption case dates back to the 1997-1998 Asian financial crisis, when the central bank issued the BLBI funds to help banks cope with liquidity after the rupiah slump and restore public confidence in the banking sector following massive withdrawals.

It was later discovered that 95 per cent of BLBI funds worth Rp 144.5 trillion disbursed to 48 commercial banks had been embezzled. In 2018, the Jakarta Corruption Court found Syafruddin guilty of issuing a debt discharge to Sjamsul Nursalim, owner of the now-defunct BLBI recipient Bank Dagang Nasional Indonesia (BDNI).

The court found that discharging Sjamsul from repaying the government loans incurred Rp 4.58 trillion in state losses, and sentenced him to 13 years in prison and Rp 700 million in fines.

Syafruddin and KPK prosecutors filed separate appeals to the Jakarta High Court, which handed down a ruling in January 2019 that favoured the KPK’s request for a harsher sentence of 15 years in prison and Rp 1 billion in fines for the former IBRA chairman.

In July 2019, Syafruddin won his appeal in cassation to the Supreme Court, which overturned the high court’s verdict.

But the three Supreme Court justices presiding the case were not unanimous in their decision. The ruling effectively put a brake on the ongoing KPK investigation into suspects ex-banker Sjamsul and his wife Itjih Nursalim.

KPK acting spokesman Ali Fikri said on Tuesday that the Supreme Court ruling had prevented the commission’s investigators and prosecutors from holding Sjamsul and Itjih responsible for alleged graft.

Ali also said the Corruption Law stipulated that a graft acquittal did not prevent the government or other parties from recovering their losses through civil litigation as an alternative settlement option.

The KPK was now “coordinating with relevant stakeholders” in supplying the task force with data and evidence from its investigations.

Reza Syawawi from Transparency International Indonesia criticised the government for setting up the BLBI asset recovery team, and that doing so at this late stage instead showed how it had been lacking a sense of urgency regarding the BLBI graft scandal.

“If the government was serious about recovering state losses, the process for civil or administrative [litigation] could have been started at the beginning [of the BLBI case] without waiting for the criminal court, in this case the corruption court, to issue its verdict," said Reza, calling the formation of the asset recovery task force belated.

"In fact, civil and criminal cases can be filed concurrently." He added that the new task force could indicate that the government was starting from scratch in recovering its assets, which would be hard to track in the now cold case, particularly if the assets were hidden abroad. - The Jakarta Post/Asia News Network

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Indonesia , KPK , BLBI , Bank Indonesia , corruption , scandal


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