Financial Crime World

Indonesian Eximbank Under Investigation: Rp 2.5 Trillion in Bad Debts from Four Companies

The Indonesian Export Financing Agency (Indonesia Eximbank) is under investigation by the Attorney General’s Office (AGO) for fraud involving approximately Rp 2.5 trillion in bad debts from four companies.

Companies Under Investigation

  • PT RII: Rp 1.8 trillion
  • PT PRS: Rp 305 billion
  • PT SMS: Rp 216 billion
  • PT SPV: Rp 144 billion

Attorney General’s Office Investigation

The finance minister’s report, representing the first stage of the investigation, was presented to the AGO by Attorney General ST Burhanuddin. The integrated team, consisting of the deputy attorney general for civil and state administrative court affairs (Jamdatun), the Financial and Development Supervisory Agency (BPKP), and the Finance Ministry’s Inspectorate General, is leading the investigation. The second stage of findings is expected to involve six more companies with Rp 3 trillion in fraudulent activities.

Previous Audit Findings

The recent fraud cases come after reports of Indonesia Eximbank’s high non-performing loan (NPL) rate since 2018, which exceeded the 5 percent limit set by the Financial Services Authority (OJK). A 2017-2019 audit by the BPK discovered that the bank had been careless in distributing loans, resulting in problematic debts.

Significant Debtors

  • A business group belonging to businessman Johan Darsono: Rp 2.18 trillion
  • Textile producer PT Duniatex: Rp 3.05 trillion
  • Coal miner PT Bara Jaya Utama: Rp 766.7 billion

The investigation led to the naming of Johan Darsono, his executive Suryono, the former managing director of Eximbank Arif Setiawan, and four other former executives as suspects in embezzlement and money laundering cases.

NPLs and Previous Loans

Sources claim that these fraud cases represent only a fraction of the NPLs at LPEI, and that there are many other non-performing loans involving even higher sums. For example, at least nine business groups received substantial loans from LPEI, including Duniatex Group, which received Rp 3 trillion. However, Duniatex avoided legal entanglements through a debt payment suspension (PKPU) scheme.

Issues Contributing to Fraudulent Activities

The poor risk management and absence of sanctions within the bank have contributed to rising non-performing loans, causing the net NPL at the end of 2020 to reach Rp 16 trillion, or 13 percent, while the gross NPL hit a staggering Rp 42 trillion.

[Sources: LPEI financial reports, The Jakarta Post, Tenggara Strategics]