On Bank Mandiri`s case in Jakarta

On the acquittal of Neloe and the arrest of ex-IBRA chief

I seem to have developed a knack for turning up in Jakarta whenever there is some interesting development. This includes the Australian embassy bombing two years ago and the Marriot bombing earlier. Well, this time last week, it was the acquittal of Bapak Neloe, the former president director of Bank Mandiri of a long string of ridiculous charges, and the arrest of the former chief of the dismantled Indonesian Bank Restructuring Agency (IBRA) Syafruddin Temenggung over the sale of state assets.

I say ridiculous because with my almost forgotten training in law, I could not see how any of the 20-odd charges against Bapak Neloe could have been framed by anyone who really thought that they could be made to stick. I also say ridiculous because maybe there should have been other charges that were more accurate, but they ignored them and based their case on loans that are current and being serviced. Even if Indonesian law, based on the Dutch system, was different from my own training, I could not see how the charges could possibly be framed to secure a conviction.

I am treading on very thin ice here. Bapak Neloe is a very nice man, and he did the best that anyone could to capitalise and build Bank Mandiri. So, really it should not be in any others interest to wish him or his team any harm either. The last time I saw Bp Neloe was at the Singapore airport lounge more than a year ago, where I exchanged cursory greetings with him. He appeared busy enough then and no more nor less preoccupied for someone in his position.

But I must admit that at about the same time that year, his CFO, Keat Lee had become very friendly, calling me up for breakfasts on more than one occasion, even on Saturdays. Although Keat Lee said nothing of consequence during those meetings, I knew something was brewing, because there was hardly any reason to meet with me. I always queried him on the price that Mandiri paid the Malaysian IT company for Silverlake core banking software – a sum that some said was at many times more than what all the other banks in Indonesia paid for the same solution. He provided me with very laboured answers, which I let pass because honestly, in Indonesia all kinds of things happen and really no one is the wiser to the actual facts, as long as the actual work gets done.

The last time I met Bp Wayan Pugeg, the former head of risk management in the bank who was charged with Bp Neloe, was at last year’s Asian Banker Summit – he was there to learn, hardly the disposition of someone who was anything less than professional in his work. (The judges seem to have released him in time for this year’s Summit in two weeks – very thoughtful of them!) I don’t really know the former director of corporate banking M. Sholeh Tasripan who was also charged with them.

Interestingly enough, the former chief of the Indonesian Bank Restructuring Agency (IBRA) Syafruddin Temenggung, who was arrested on Wednesday was also a speaker at the Asian Banker Summit two years ago, when we invited all the heads of the distressed asset companies in the different countries after the 1997 crisis to give us an update of their progress. I must say that by all accounts, Bp Syafruddin did an excellent job as the IBRA head. His was an impossible job at an impossible time in Indonesian corporate history. If he had played into the hands of the politicians, nothing would have got sold, and if he had played into the hands of the bargain hunters, he could have raided the national assets.

Technically, it is not my place to speculate whether these gentlemen were guilty of the accusations they have been tarred with. It is in the function of civic society that those of us who are peers should just get on with our work and not speculate unless we are privy to information that we should deal with. The role of identifying, investigating, prosecuting and convicting those who stray belongs to the authorities and it is a function that they absolutely need to execute with skill and certainty if they are to preserve the integrity of society.

It is in this vein that I had no difficulty in inviting Andreas Susetyo, Bank Mandiri’s EVP of Technology to continue being a member of our IT Advisory Council this year. The Council will meet during the Asian Banker Summit on 15-17 March ( look up our website) in Bangkok.

Professionally, he has made considerable contributions to the thinking that should go into the IT infrastructure for large Indonesian banks. Now, outside of that, I am not privy to any detrimental information.

As I am in the information and not legal business, it is my job to provide the most neutral and professional platform for the different propositions to be discussed and debated, and not to make judgments on issues where the facts are not made available to me. There are questions that many of us would like to ask Andreas. But if we don’t create that forum, then he will not have the chance to state his positions very clearly and we undermine civic society in this way.

In Singapore and in Shanghai, I have known people who are very respected amongst their peers, but who suddenly got their 15 minutes of fame in the newspapers, unfortunately for white collar crimes that sometimes surprises us. In some cases, when the whole story unfolds, it becomes clear to me why and how they ran foul of the law. In some cases, I can even be sympathetic, reminding myself that “there but for the grace of God” the rest of us don’t get into those situations. But the law is the law, and man is man, and we must make the clear distinction between the two.

Excluding hard-core pre-meditated criminals, even in the best of societies I can see many situations where the best of us, trying to do our best, allow our lack of judgment and character to make the worst choices.

We confuse ourselves further by being moralistic about our own positions. It is actually precisely because of the confusing and subjective sentiments that we entertain in everyday life that it is so important that the police, the anti-corruption authorities and the legal system simply must function strongly and independently from everyday life. The problem with the Indonesian legal and policing systems, it would appear, is that they are still so much in their formative years in this regard, and take their cues from politicians and other powerful brokers.

I think that the protests of the foreign “good governance” observer, the Indonesian Corruption Watch (ICW) and even the president of Indonesia against the release of Bp Neloe and his team were completely unhelpful. If there is a weakness in the system, fix it. If these professionals were wrong, get them on very clear premises, so that the rest of us are very clear as to what the parameters are. Crying sour grapes just because they did not get what they wanted makes these activists no better than the rest of the detractors in the marketplace.

One local newspaper’s comment, “the government’s willingness to go after Bank Mandiri … has been held up as an example of Yudhoyono’s willingness to fight corruption” is also very simplistic and populist, because just going after someone does not in any way validate a leader’s resolve to deal with corruption. It is the skill, independence and determination of the legal system that determines that resolve. In this respect, the moralistic Indonesians get angry with the wrong elements.

Just as an indication of the effect this level of uncertainty this has in society, one far fetched theory offered to me over lunch in Jakarta was that the government has been trying to get Muslim Indonesians to lead the local banks, and that Bapak Neloe was Christian and that is why they had to remove him in that way. Whoever spread that rumour undermines the sophisticated nature of the Javanese people (they put him there in the first place), and seriously needs to get a life. But the absence of certainty in the law creates these kinds of “urban myths” that in turn breeds suspicion and further destabilises society.

For the record, I do think that the formation of Bank Mandiri and the work that has gone into building its infrastructure has been highly commendable and is a showcase of a very dedicated team of professionals led by Bp Neloe. If he was as much Indonesian as everybody else and succumbed to comprises along the way, then the rest of us who have no reason to doubt his professional skills will depend on the integrity of the confusing legal system to show us what went wrong. Indonesia has only a handful of highly competent leaders like that of Bp Neloe. To treat him poorly will be a signal to others that they too will be subject to the uncertain tides of a poor legal system. To fail in this regard is perversity in itself, because Indonesia cannot do with undermining its pool of talent in this way.

As a last word, I just want to say that whenever the facts are made available to us, we do call a spade a spade. Those who know me, know this. On at least two occasions in the past, I have paid the price of completely slashed advertising and sponsorship and other adverse reactions from companies that were exposed in this publication. I am willing to pay the price.

In saying this, I am also saying that I don’t want to take an adverse position on the current cases of corruption against bankers in Indonesia, not because I am skitting the issue, but because that is all I am entitled to think about. To be otherwise is to be as perverse as everybody else. I, like everybody else, need guidance from the system. At this point in Indonesia’s history, it is the system that is failing the people. The people are, well, just being themselves!

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