IDM-NEWS

In a verdict that is being viewed as a major setback to the government’s war on corruption, a Jakarta court has acquitted three former executives of Bank Mandiri of all charges in a graft trial over a Rp160 billion ($18.5 million) lending scandal.The bank’s former president director Eduard Cornelis William Neloe (61), vice president I Wayan Pugeg (58) and corporate banking director Sholeh Tasripan (49) were exonerated on Monday (20/2/06) by South Jakarta District Court, which has long been regarded as one of the country’s most corrupt courts.

Presiding judge Gatot Suharnoto said that based on testimony from witnesses, there was no proof that Bank Mandiri’s loan to a local investment firm had inflicted a financial loss on the state because the money is still being repaid.

“The defendants… were not proven legally and convincingly to have carried out graft. The court acquits the defendants from all charges given by the prosecutors and orders their release,” the judge was quoted as saying by Reuters.

Neloe, Pugeg and Tasripan were declared suspects on May 11, 2005, after the Supreme Audit Board (BPK) reported on Bank Mandiri’s problematic loans worth Rp12.2 trillion ($1.3 billion) to 22 debtors. The three directors were fired on May 16. They were arrested the following day and sent to a detention cell at the Attorney General’s Office.

Some of the loans had gone to companies linked to prominent politicians, including Vice President Jusuf Kalla and Coordinating Minister for People’s Welfare Aburizal Bakrie. No one was surprised when the Attorney General’s Office claimed that due to “time limitations” it could not investigate all of the firms linked to the politicians. So far only four of the 22 debtor companies have been investigated, including one owned by Suharto era manpower minister Abdul Latief, who profited handsomely from his time in office.

Neloe, Pugeg and Tasripan went on trial in October, with prosecutors focusing only on Mandiri’s loan in October 2002 of Rp160 billion ($18.5 million) to Sumatra-based investment firm PT Cipta Graha Nusantara (CGN). Prosecutors said the three ignored the principle of banking prudence because they approved the loan in only one day, without objectively examining the CGN’s credibility or the feasibility of the project to be financed with the money.

The court heard that CGN had proposed to use the loan to buy a hotel in the North Sumatra capital of Medan but abandoned the venture after receiving the money. The hotel in question, Hotel Tiara, was operated by PT Tahta Medan, which is owned by PT Trimanunggal Mandiri Persada (TMP) – a firm that is reportedly controlled by Golkar Party executive and media tycoon Surya Paloh.

TMP had bought Tahta Medan from the Indonesian Banking Restructuring Agency for Rp97 billion ($10.5 million). It therefore seemed illogical that CGN would need $18.5 million to acquire the company.

The three defendants were charged under Article 55 of the 1999 Anti-Corruption Law, which carries a minimum penalty of four years’ imprisonment and a maximum of life imprisonment. They were also charged under Article 64 of the Criminal Code. Prosecutors had recommended they each be sentenced to 20 years in prison and fined Rp1 billion (or face a further 12 months in jail).

Defense lawyers had argued the three did nothing wrong and demanded the case be dismissed because the loan to CGN was a civil action and should not be classified as a criminal act.

The defendants had argued the loan did not cause a financial loss to the state because CGN’s debt had been rescheduled and would be due in September 2007. The court heard that as of December 2005, CGN had already repaid Rp58 billion of its debt to Mandiri, as well as $700,000 in interest payments.

In handing down the not guilty verdict, Suharnoto noted that the loan to CGN had not yet matured. The judges also ordered the state to return any assets seized from the defendants and to pay court costs of Rp7,500.

Chief prosecutor Baringin Sianturi said he was yet to decide whether to appeal the verdict. “We will think about it,” he said.

The defendants and their families reacted joyfully to the verdict by hugging and kissing one another. Tasripan’s wife Nakiah even prostrated herself and kissed the floor of the court. Pugeg and Tasripan had tears in their eyes, although Neloe was not moved to tears.

“Long live the judges!” shouted about 50 supporters of the defendants. Upon leaving the court, Neloe raised his hands toward the sky and smiled broadly.

Attorney General’s Office spokesman Masyhudi Ridwan said the defendants would be freed from detention on Monday night in line with a release order signed by South Jakarta Prosecutor’s Office head Iskamto.

President Susilo Bambang Yudhoyono, who has made corruption eradication a cornerstone of his government, will not intervene in the acquittals because he respects the independence of the courts, said presidential spokesman Andi Mallarangeng. “The judiciary is a branch of the trias politica [separation of powers], which is independent,” he was quoted as saying by state news agency Antara.

But Yudhoyono, who was in South Sulawesi capital of Makassar, seemed more concerned about the case than his spokesman. “I want transparency upheld concerning why, what and other things about Neloe and the two other defendants being acquitted of graft charges. The public has the right to know what went on,” he was quoted as saying by The Jakarta Post.

He said reasons behind the ruling must be revealed so the government and law enforcers would not be disheartened.

Bank Mandiri is the country’s largest bank and is 70% owned by the government.

Attorney General Surprised, Disappointed
Attorney General Abdul Rahman Saleh said the not guilty verdict was “surprising” and “disappointing”.

“Very disappointing. Frankly I am disappointed with the decision of the court,” he was quoted as saying by the Media Indonesia daily’s online edition.

He said his office would seek legal measures to challenge the ruling, but stopped short of saying when state prosecutors would lodge an appeal. “We will just be patient and pray, there are other ways,” he was quoted as saying by state news agency Antara.

Saleh said the ruling could not be considered final until challenged in the Supreme Court. “The story is not over yet. Possibly the Supreme Court will give a heavier punishment. Let’s be patient while waiting for the process of law,” he was quoted as saying by detikcom online news portal.

He pointed out that some corruption suspects acquitted by district courts have later been convicted by higher courts. He cited the example of Sudjiono Timan, former president director of state-owned PT Bahana Pembinaan Usaha Indonesia, who was acquitted in November 2002 by South Jakarta District Court of involvement in a swindle that cost the state $240.9 million. The Supreme Court in December 2004 overturned the verdict, sentenced Timan to 15 years in jail and ordered him to repay much of the money.

Saleh neglected to mention that Timan managed to avoid going to jail by bribing crooked police to help him flee the country. The fugitive now apparently resides comfortably in Singapore. Several other corruption felons have also managed to leave Indonesia thanks to help from crooked officials.

The attorney general denied the acquittal of Neloe, Pugeg and Tasripan was due to any flaws or weaknesses in the prosecution’s case. “Not only I, but all officials at the Attorney General’s Office, including the deputy attorney general for special crimes, have monitored this case from the beginning and we found the charges to be very strong,” he said.

Judicial Commission Shocked, May Summon Judges
The Judicial Commission described the verdict as shocking and said it would consider summoning the panel of three judges.

“This is very shocking and we are taking measures by requesting a copy of the verdict so we can study it. If we come up with findings, we can seek confirmation by summoning the judges,” commission chairman Busyro Muqoddas was quoted as saying by detikcom.

Commission member Irawady Joenoes said the verdict would upset the public’s sense of justice. “The small people see a defendant facing a 20-year sentence, so how come he was released?” he said, adding the severity of the sentencing demand indicated the prosecution was certain that corruption charges had been proved.

“As a former public prosecutor, I feel the prosecution was courageous to demand a 20-year sentence for such a prominent person, which means the prosecution was very convinced the case was proven,” he said.

‘National Tragedy’
Legislator Trimedya Panjaitan of the Indonesian Democratic Party of Struggle (PDIP) said the verdict was a slap in the face for the Attorney General’s Office.

“This is a national tragedy for the Attorney General’s Office. Furthermore, this is mega-corruption,” he was quoted as saying by detikcom. He said he was uncertain whether parliament could seek to intervene in the case.

Fellow PDI-P legislator Gayus Lumbun said the judges were very bold to have acquitted the defendants, but added that the prosecution’s arguments might have been imprecise.

Another legislator, Almuzammil Yusuf of the Prosperous Justice Party, said either the judges or the prosecution were at fault for allowing the suspects to be acquitted. “I don’t want to intervene in the judiciary’s verdict against Neloe. I only want to ask whether the public prosecutor or the judges had negligently quoted provisions of the law,” he said.

Yusuf, who is deputy chairman of parliament’s Commission III on law, said the verdict did not make sense. “How could the demand for a 20-year sentence be followed by an acquittal? I hope the Attorney General’s Office, the Supreme Court and Judicial Commission will pay attention to the process of prosecution’s demand and the determination of the verdict by the judges in this case.”

He said the case would cause public controversy, so there should be an investigation into whether there had been deliberate weaknesses in the judges’ ruling or the prosecution’s indictment. “If the Attorney General’s Office really agreed with the prosecution’s demand, then it must put forward an appeal to the Supreme Court.”

Indonesian Legal Aid Institute Foundation (YLBHI) director Munarman said the Judicial Commission must investigate whether the judges had been influenced to manipulate facts or evidence. “The judges were insensitive to combating corruption. The veracity of the facts and testimony in the trial were unproven. The public prosecutor evidently believed differently. So the Judicial Commission must investigate the judges,” he said.

“This is a legal accident. It must be seen whether or not the judges’ verdict was based on fact. It is the prosecutor’s duty to immediately put forward an appeal to the Supreme Court appeal for the sake of the law,” he added.

Indonesian Corruption Watch coordinator Lucky Djani said the verdict was hardly surprising because it is not the first time that corruption suspects have been acquitted.

He said the court’s ruling showed that Yudhoyono’s efforts to combat corruption were increasingly below expectations.

He said that although the government cannot intervene in the case, it can make efforts to stop banks from giving questionable loans to companies with strong political connections.

Prominent lawyer Adnan Buyung Nasution said the verdict should not dampen the government’s enthusiasm to combat corruption. “I acknowledge the acquittal of Neloe. But hopefully this will not reduce the government’s spirit to counter corruption,” he was quoted as saying by detikcom.

He questioned why only Neloe and his two associates were prosecuted, whereas no action was taken against the recipients of the loan. He said the truth behind the lending scandal was unlikely to emerge if authorities were unwilling to prosecute all of the parties that had received questionable loans from Bank Mandiri.

Neloe Thanks Press
After the verdict, Neloe thanked the press, claiming the national media had not branded him a criminal. “First, I say thank you to press world because throughout the trial, the mass media gave a positive analysis and told it the way it is,” he was quoted as saying by detikcom.

He acknowledged the prosecution is likely to appeal his acquittal. “This is not over yet, the journey will definitely continue. But on this day we have seen and proved that justice still exists in our country.”

Neloe said he did not feel guilty because his actions had not enriched himself or others. “As was said by Vice President Jusuf Kalla, that which must be tried is corruption, not the policy. Because if the policy is tried, it will damage our judiciary.”

Neloe’s lawyer Tjokorda Maderam said he would be ready to file a counter-appeal if the prosecution appeals the verdict at the Supreme Court.

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