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Wednesday, September 22, 1999 Published at 13:40 GMT 14:40 UK


Business: The Economy

Police deny Indonesia bank scandal cover-up

Some allege that the money funded Habibie's re-election campaign

Police in Jakarta deny they are covering up a banking scandal, as they condemn an independent report on the affair.

Indonesia's Bank Bali is accused of paying an $80m "commission" to the deputy treasurer of the ruling Golkar party in order to get back loans seized by the government's Indonesian Bank Restructuring Agency (IBRA).

Indonesian police investigating the scandal said they would only use small parts of the PricewaterhouseCoopers (PwC) report in their probe.

Police have dismissed the report as "illogical" and refuse to name as suspects senior officials mentioned in the report.


[ image: President Habibie: Denies involvement]
President Habibie: Denies involvement
National police spokesman Togar Sianipar said: "The audit by PwC tends to target certain people.

"For example, it decides on someone as a target, and then investigates the flow of funds as if that person was involved, even if this is not logical."

Mr Sianipar would not say which parts of the audit were "not logical", but denied police were not using the full audit because it named high-ranking officials.

Details of the fund flow - which could indicate who received money from the suspect transactions - were left out of the PwC audit circulating in Jakarta, at the request of the state Supreme Audit Agency.

The agency said banking secrecy laws prevented the fund flow being made public.

The Indonesian opposition says some of the money funded the re-election campaign of President Habibie - an allegation he denies.

Financial aid suspended

The scandal also implicated key officials in charge of Indonesia's bank restructuring programme.

Police have so far named some officials at IBRA and the central bank as suspects, along with former Bank Bali president Rudy Ramli and Mr Setya Novanto, a leading official in the Golkar party.

But no top level government or bank officials have been named as suspects.

The International Monetary Fund and World Bank have said loans to Indonesia are on hold pending a thorough and open investigation.

IMF managing director Michel Camdessus told French radio on Wednesday that talks with Indonesia on its economic programme were suspended earlier this month over their failure to provide the results of audit checks.





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