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State banks entangled in US bribery case

Three of Indonesia’s four state-owned banks have been implicated in a bribery case involving the US-based automated teller machine (ATM) manufacturer Diebold Inc.

According to a statement issued by the US Securities and Exchange Commission (SEC), Ohio-based Diebold was charged with violating the Foreign Corrupt Practices Act by bribing bank officials in Indonesia, China and Russia. The company agreed to pay more than US$48 million to settle the allegations.

The statement issued on Tuesday said that from 2005 to 2010, Diebold’s subsidiaries in Indonesia and China spent approximately $1.8 million on travel, entertainment and other improper gifts for senior executives with the ability to influence their banks’ purchasing decisions.

The amount of money spent by PT Diebold Indonesia on bribing officials at “Bank X, Bank Y and Bank Z” in Indonesia exceeded $147,000, while the remainder was spent paying off Chinese officials by Diebold Financial Equipment Company (China) Ltd.

Indonesia has four state banks, Bank Mandiri, Bank Rakyat Indonesia (BRI), Bank Negara Indonesia (BNI) and Bank Tabungan Negara (BTN). The statement did not name which of the banks were involved.

The SEC’s complaint, which was filed in a federal court in Washington DC, also reveals that Diebold’s executives in charge of the company’s operations in Asia were aware of the improper facilities.

“In one email exchange in 2009, a Diebold Indonesia employee sought approval from his supervisor to pay for a leisure trip to Europe for officials of Bank X. The supervisor approved the payment and responded: ‘Make this trip successful for upcoming bid too!’” the document says.

When contacted, Diebold Indonesia country manager Wayan Prima Nugraha said that he needed time to ask for an explanation from the company’s headquarters in the US. “I don’t know what happened and am waiting for the main office to explain it to me. I sent the request today [Wednesday],” he said in a text message sent to The Jakarta Post on Wednesday.

Bank Indonesia (BI) Governor Agus Martowardojo, who served as Bank Mandiri president director in 2005-2010, said that he did not know about the occurrence of such practices when he led the bank. “One must verify the news and give proof first because there are four state-run banks here,“ Agus told reporters at the House of Representatives.

According to BI spokesperson Difi A. Johansyah, the central bank has summoned all of the four lenders’ compliance directors and their internal audit teams to provide explanations.

Bank Mandiri president director Budi Gunadi Sadikin acknowledged that the bank had been using Diebold’s ATMs since 2005, but insisted that it had followed every procedure set in its ATM procurement process and welcomed any probe by the banking authority.

Separately, BRI president director Sofyan Basir said that the bank had not used Diebold ATMs since 2007. “The report says that Diebold paid for the officials’ expenses. As far as I know, we’ve always paid for our own expenses when attending trips,” he said.

Meanwhile, BNI denied having any kind of business relations with Diebold Indonesia. In a text message, BNI corporate secretary Tribuana Tunggadewi said that the bank had never received invitations from the company and that no BNI officials had ever travelled to meet its representatives.

Foreign Corrupt Practices Act (FCPA) cases

January 2005
Monsanto, an agriculture company based in Missouri, the US, is fined US$1.5 million by the US exchange authorities for bribing 140 Indonesian officials to allow it to develop GM crops in Indonesia.

March 2010
Innospec Limited — the UK arm of a US chemicals firm — is fined $12.7 million by the Southwark Crown Court for bribing officials, including Indonesian officials. Pertamina’s former processing director, Suroso Atmo Martoyo, allegedly received Rp 2.7 billion from the company.

December 2012

German insurer Allianz SE agreed to pay more than $12.3 million to settle US Securities and Exchange Commission claims that the insurer made improper payments to government officials in Indonesia during a seven year period.

Source: The Jakarta Post

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