Sand in Singapore’s Gears

It started with a barge-load of Indonesian sand, or a whole

fleet of them, delayed for the last two months on their way to Singapore

to be used in reclamation projects.

At first Indonesian officials insisted the sand without a

country was held up for environmental reasons. Now, it appears the sand is

actually political leverage in an extradition tiff with Singapore over a brace of crooked

bankers hiding out in the city state.

What’s really at stake is not sand, which should be the

world’s cheapest commodity, but an extradition treaty that Singapore government authorities

have been refusing to sign for 34 years. Indonesia wants a bunch of elusive

bankers who took part in an astounding heist of more than US$13.5 billion

looted from the Indonesian central bank’s recapitalization lifeline to 48

ailing banks during the 1997-1998 Asian financial crisis.

The matter is an embarrassment to Singapore to say the least. It is

safe to say that no country in Asia is more

jealous of its reputation for incorruptibility, grimly built and guarded by its

83-year-old founder and “minister mentor,” Lee Kuan Yew over more than five

decades.

Despite that, the city-state has always been a bolt-hole for

Indonesian tycoons a step ahead of the law or sporadic ethnic violence. According

to Tempo Magazine, there are some 18,000 Indonesians described as “rich” living

in Singapore worth a

combined total of US$87 billion – more than Indonesia’s entire annual

government budget. Yunus Husein, Chairman of the Financial

Transactions Report

& Analysis Center

in Jakarta, told Tempo that the Indonesian

embassy in Singapore

had confirmed that some 200 debtors who owe money to the state had been hiding

there since 1998.

The Singapore

embassy in Jakarta

declined comment other than to tell Asia Sentinel questions over the matter had

already been referred to authorities in the city state. On Feb. 19, Singapore’s

Ministry of Foreign Affairs issued a statement saying that the two countries

are making progress in negotiations over the treaty “in good faith on the basis

of mutual benefit.” The treaty, the ministry said, is linked to negotiations

over a mutual defense agreement.

“Unilaterally making sand an additional issue with the

objective of delinking the defense cooperation agreement from the extradition treaty

contravenes the earlier agreement by the two leaders,” the ministry statement

said. “As for the linkage to border delineation, Minister for Foreign Affairs

George Yeo said in Parliament recently that ‘the talks are complicated enough

without this additional complication.’"

Sand – Indonesian sand – is crucial for Singapore. In 1960,

the entire island state was only 581.5 square kilometers. It has since grown to

some 650 sq km and expects to grow by another 100 sq km by 2030 – if it can

find the firmament.

But the prevailing view in Jakarta is

that Singapore

isn’t going to get any more sand until officials sign the papers that would

cause it to cease harboring what are alleged to be Indonesian criminals and

their ill-gotten gains.

Instead of recapitalizing their banks, many bankers simply skipped and

parked their funds in Singapore, which welcomed the deposits, unaware that

times were about to change in Indonesia after former

President Suharto was forced from office in 1998.

While the process of Indonesian democratization and fighting

corruption has been slow at best, in this case a Supreme Audit Agency report

commissioned by the House of Representatives, the Indonesian parliament,

revealed that a massive Rp138 trillion of missing funds had been channeled by

improper procedures and then misused by the recipient banks, mostly owned by Suharto’s

cronies and relatives. Instead of managing the funds to guarantee depositors'

savings, the errant bankers used much of the money for currency speculation,

loans to affiliated business groups and repayment of subordinated loans and

securities transactions.

Indonesia

is a place, however, where most things can be negotiated and since the errant

bankers weren’t remanded to custody, by the time the courts had handed down

final verdicts, they had absconded. Another common tactic was to plead illness.

Instead of insisting on speedy prosecutions, complicit Indonesian officials

continued to grant court delays and issue permits for medical treatments

abroad.

Prosecutors could do little, if anything, to prevent flight as

only the courts have the power to order detention during the trial process.

As recently as last June, travel bans were slapped on eight

former owners of banks for failing to repay the money. The eight are Marimutu

Sinivasan, Ulung Bursa, Atang Latief, Lidia Muchtar, Omar Putiray, Adisaputra,

James Januardi and Agus Anwar, who are estimated have a combined principal debt

of Rp3.02 trillion.

Still on the lam, among many others, are: Sjamsul Nursalim,

former president commissioner of Bank BDNI, who reportedly lives in Singapore.

Bank BDNI was the second-largest recipient of funds after Bank Central Asia, a

Rp37 trillion gift from the government.

Samadikun Hartono, former president director of the

now-closed Bank Modern, 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 Kiki Ariawan are also 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 an 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, Bahana Pembinaan Usaha Indonesia ended up with debts of

almost $1 billion and was owed hundreds of millions in outstanding loans by

corruption-linked tycoons.

Others include Lidia Mochtar, suspected of embezzling the

equivalent of US$S20 million from Bank Tamara; Agus Anwar, a suspect over US$214

million missing from Bank Pelita; and Maria Pauline Lumowa, who headed PT

Gramarindo Mega Indonesia

and is suspected of masterminding the embezzlement of Rp1.7 trillion from

state-owned Bank Negara Indonesia

through allegedly fictitious letters of credit. She fled to Singapore before trial.

In October 2006 Tempo magazine reported that several had

moved their head offices to Singapore, including Sukanto, boss of the Raja

Garuda Mas Group, which had problem loans amounting to US$1.4 billion (Rp13

trillion) owed to several national private banks. Asia Pacific Resources

International Holdings Ltd, one of Sukanto’s business units, controls paper and

pulp businesses in China, Indonesia, Hong Kong,

Brazil and Finland.

Tempo noted comments by Andy Xie, then senior economist of

Morgan Stanley Asia, that “Much of the success of Singapore

is due to it becoming a money laundering center for corrupt business people and

officials from Singapore.”

Xie was almost immediately cashiered by Morgan Stanley for this and other

related comments.