By: John Berthelsen

A late December decision by Indonesia’s feared Anti-Corruption Commission to bar Robert Tantular (above), the man at the epicenter of Indonesia’s long-running Bank Century scandal, from leaving the country is an indication that the organization’s probe into corruption in the 10-year-old affair isn’t going away.

Tantular was quietly freed from his cell in Jakarta’s Cipinang prison last July by the Ministry of Justice and Human Rights after 10 years in prison – 11 years early – over the objections of the commission, known by its Indonesian initials KPK. Laode Anies, the deputy chairman of the commission, questioned why the ministry had paroled the former banker, who already was rumored to be imprisoned under extremely lenient terms.

The bank has long been the subject of controversy over its political connections. It was widely believed in Indonesia to have been the repository of hundreds of millions of dollars of slush funds tied to the Democrat Party. More than US$850 million disappeared during the global financial crisis of 2008, according to authorities.

The KPK, known as an incorruptible graft watchdog, over recent months has been the subject of a disturbing series of intimidation attempts although there is no evidence that those incidents are tied to any particular entity the commission is investigating. On Jan. 9, the chairman, Agus Rahardjo and his deputy, Laode, were targeted when an unknown culprit hooked a bag containing an object looking like a bomb to the fence of Agus’s home. At the same time, two motorcyclists hurled Molotov cocktails at Laode’s home, one of which exploded. The other didn’t. In 2017, senior investigator Novel Baswedan was partly blinded when assailants threw hydrochloric acid in his face.  

Other attacks have included bomb threats to the KPK building, bombings to the houses of investigators, acid attacks into vehicles belonging to investigators and employees, death threats, seizure of equipment belonging to investigators, kidnapping of KPK officers on duty and attempted murder of investigators.

Despite those threats and incidents, as Asia Sentinel reported last week, at least 40 government and private officials connected to Bank Century and its successors Bank Mutiara and Bank JTrust Indonesia have been questioned by the KPK since the agency resumed its investigation in June 2018. Former Deputy President Boediono, who also served as the governor of Bank Sentral Republik, Indonesia’s central bank, and Kartika Wirjowatmodjo, the former head of the Indonesian Bank Insurance Corporation and current president director of Bank Mandiri, the country’s biggest bank, are among individuals said to be under investigation along with Tantular.

More than US$1 billion is said to have disappeared from Indonesia’s treasury since 1989, according to a lawsuit filed in the Supreme Court of Mauritius, including the equivalent of US$245.2 million paid and forgiven to the Japanese financial concern J Trust Co. to take over the bank, with the potential for criminal action against officials all the way up to the top of the government.

In 2009, the bank, recapitalized and renamed Bank Mutiara, came under the administration of the Indonesian Bank Insurance Corporation, a quasi-autonomous government organization more widely known by its Indonesian acronym LPS. Indonesian sources say concern was growing about the rat’s nest that would be found inside the bank once a new administration came into office, and they were determined to get it off the books of the agency before President Joko Widodo took office.

The LPS went in search of buyers in 2014. Although it was offered to 18 would-be purchasers, it found few takers and the bank was eventually sold to J Trust Co. in a transaction that appears to have been anything but arms-length and transparent.

The sale in fact appeared to be structured so that J Trust was the onlay bidder, with preferential, predetermined terms. The Japanese concern renamed it Bank J Trust after supposedly agreeing to pay the equivalent of US$368.0 million in cash under Indonesian Financial Services Authority law.

But the records make it look like J Trust actually paid only 6.8 percent of that amount, or US$24.14 million upfront, and that was 33 days after the alleged sale date despite LPS regulations that said the money had to be paid upfront in cash. According to an exhaustive examination of both J Trust’s books and LPS records, it appears that the LPS, the central bank and several other government agencies were complicit in the transaction.  

As Asia Sentinel reported on April 10, 2017, it was publicly announced by the Indonesian government that J Trust had bought Bank Mutiara and paid the equivalent of US$368 million for 99.996 percent of it. But no mention of a cash payment of that amount has appeared in any of J Trust’s financial statements over the past four years. Under Financial Services Authority and LPS law, J Trust was required to pay the US$368 million in cash in full at the time of purchase. However, LPS records show that J Trust paid only the equivalent of US$24.14 million down with a promise to cover future losses for a set period of time.

Bank Indonesia then arranged for a sharia loan promissory note through the Deposit Insurance Corporation for the remainder.  In 2016, according to LPS records, the insurance corporation wrote down Rp3.065 trillion (US$246.06 million) on the sharia promissory note. That means the note was never paid and J Trust was virtually given Bank Mutiara in exchange for covering the flailing bank’s losses from Nov. 20, 2014 onward, up to a capped amount within three to five years.  Those losses amounted to US$151.8 million as of November 30, 2018.

No record of the payment

There is no record, either in J Trust’s annual reports, or in the LPS’s records, that the sharia loan or the upfront US$368 Conditional Share Purchase Agreement (“CPSA”) purchase price proceeds have ever been paid by J Trust in cash.  In fact, funds deposited into a trust account a Bank Negara Indonesia appear to have been paid directly by the PS allegedly from the Rp3 trillion leveraged buyout Shariah loan note issued in January 2014 to J Trust.

Asia Sentinel has repeatedly asked the LPS in a series of emails for the details of the sale, without ever receiving an adequate explanation of what happened. After the emails produced no substantive responses, the editors of Asia Sentinel decided to go ahead with the story. 

Asia Sentinel has also repeatedly sought to get J Trust to provide details of its payment for the bank. After three emails to J Trust’s international public relations representative Keiko Nishihara, J Trust’s lawyers Nishimura and Asahi of Tokyo, were told that J Trust had no intention to answer enquiries. A later enquiry to the LPS with detailed questions concerning the sale of Bank Mutiara to J Trust has also gone unanswered. 

On Jan. 18, Bank J Trust’s board of commissioners temporarily suspended the former president director and Ritsuo Ando and Haryanti Budi Purnomo, director and risk management compliance officer respectively, in what appears to be a Japanese executive-led attempt to lay the blame on the Indonesians for more than US$300 million of bad loans written off by Bank J Trust since 2015.

CFO Helmi Hidayat and new director Rio Lanasier signed the decree and notice of temporary dismissal of directors, leaving only three directors on J Trust’s books attempting to stave off the insolvency of the bank yet again, prior to its upcoming sale of 40 percent to new owners that was promised by Fujisawa in his J Trust webcast of Nov. 15, 2018.