The finance company helped Bank Bali recover the loans, but took a 60% commission, or about $70 million. Mr. Novanto described it as a debt collection fee. Mr Habibie’s rivals in Golkar said the money was intended to buy votes in November’s presidential election, which will be decided by MPs, not a popular vote. Mr. Novanto denies the charge.
The scandal was opened in July by a consultant and gadfly, who had obtained documents about the arrangement. Overnight, Mr. Ramli’s Faustian bargain threatened virtually every top finance official in Indonesia. Among those accused of knowing about the deal were Finance Minister Bambang Subianto; central bank governor Syharil Sabirin; the Minister of State Enterprises, Tanri Abeng, and one of Mr. Habibie’s closest advisers, Arnold Baramuli.
Under pressure, the government hired PricewaterhouseCoopers in August to investigate. Despite only two weeks and limited access to information, the company said it uncovered “numerous indicators of fraud, non-compliance, impropriety, misappropriation, undue preferential treatment, concealment, bribery and corruption”.
Even without naming names, the abridged report paints a stark picture of how officials have used Indonesia’s bank restructuring program as leverage to extract payments from Bank Bali. He describes how Mr Ramli’s requests for help were rejected by regulators and then suddenly granted after meetings between Bank Bali officials, regulators and Mr Habibie’s advisers.
Testifying in parliament, John Campbell, the PricewaterhouseCoopers partner who wrote the report, said regulators had approached 12 other banks to strike similar deals.
He noted that the way bank restructuring was organized, regulators had access to vast pools of money to bail out some banks and not others. Such a setup, Mr Campbell said, had created “high internal and external vulnerability to fraud and misconduct”.