Indonesian tycoon held over bank failure

Anti-corruption protests are a frequent occurrence in Indonesia this year

JAKARTA, Indonesia -- Indonesian tycoon and major debtor to the state, Sjamsul Nursalim, has been detained by the attorney general's office.

The action is in relation to the collapse of Bank BDNI in the late 1990s, the director of investigation at the attorney general's office Soedibyo Saleh told reporters late on Monday.

"Starting tonight (Monday), Sjamsul Nursalim will be detained for 20 days in connection with the case of Bank Indonesia liquidity support given to his bank, BDNI (Bank Dagang Nasional Indonesia),"

The decision followed half a day of questioning by officials.

Nursalim heads the Gajah Tunggal Group that controlled BDNI, a relatively large listed financial institution until it collapsed in 1998 during the Asian economic crisis despite receiving central bank liquidity support.

The bank's operations were subsequently frozen and its assets taken over by Indonesia's powerful bank restructuring agency (IBRA).

The Gajah Tunggal Group's interests include tyre producer PT Gajah Tunggal, plastic and polyester maker PT GT Petrochem, cable producer PT GT Kabel Indonesia and shrimp farm PT Dipasena, all pledged to IBRA.

Nursalim declared a suspect last year

At the height of the economic crisis, emergency credits were pumped into many Indonesian banks in an unsuccessful bid to prop up the sector.

Nursalim was first declared a suspect in the case in October last year.

At that time President Abdurrahman Wahid was quoted in Indonesian media as saying legal proceedings against Nursalim and two other well known tycoons should be delayed because of their importance to the export sector.

But that sparked mounting calls for Jakarta to toughen up and prosecute conglomerate owners whose cumulative bad debts have shattered Indonesia's banking system.

Reuters contributed to this report.

Indonesian Bank Restructuring Agency
Gajah Tunggal

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