Trial of Indonesia's central bank governor begins

Asian Economic News, Jan 22, 2001

JAKARTA, Jan. 17 Kyodo

The trial of Bank of Indonesia Governor Sjahril Sabirin over a Bank Bali scandal began Wednesday at the Central Jakarta District Court.

Government prosecutor Y.W. Mere accused Sjahril of allowing Bank Bali to pay a fee of 546 billion rupiah, then equivalent to about $70 million, to a company linked to the former ruling party Golkar.

The Bank Bali scandal, which led the International Monetary Fund (IMF) to suspend loans to Indonesia, revolved around the dubious transfer of state money to political party officials and top aides of then President B.J. Habibie.

''This corruption has made the state to suffer loses amounting to 904 billion rupiah,'' said prosecutor Mere, reading indictment document.

Sjahril, who continues to serve as the Bank of Indonesia governor, faces between 20 years in jail to life imprisonment if found guilty.

Two key figures on the scandal were acquitted of corruption by South Jakarta District Court last year.

Djoko Tjandra, an employee at a private company that collected the loan fee, and Pande Lubis, then a senior official at the Indonesian Bank Restructuring Agency (IBRA) were both cleared of charges in the case.

Sjahril was released in early December after almost six months of detention, after being arrested at the Attorney General's Office on June 21, and placed under house arrest on Oct. 18.

He has denied any wrongdoing over the scandal, and refused President Abdurahman Wahid's demand that he resign.

Wahid had since been blamed for meddling in affairs of the central bank, which is independent under the law.

Sjahril's release followed newspaper reports that the IMF questioned government authorities over his arrest and the bank's independence in relation to a planned amendment to the country's central bank law.

It is widely perceived that the amendment to the law, passed late last year upon recommendations from the IMF, is a bid by Wahid to replace Sjahril with his own appointee.

Sjahril was detained in June on suspicion of ignoring standard banking principles of prudence when he approved a dubious debt repayment last year to Bank Bali by another ailing bank, BDNI, which was under state control and banned from conducting transactions.

The bank governor has insisted he is innocent, saying he approved the reimbursement in accordance with instructions from the Ministry of Finance before the central bank law, which guarantees the bank's independence, took effect.

His arrest, reportedly made at Wahid's request, sparked protests and controversy across the country, with the president's critics questioning his intervention in the newly independent central bank.