Endang Utari, daughter of Ibnu Sutowo, has cost the country billions of rupiah
Suara Independen (June 1997)
The success story of Endang Utari Mokodompit, managing director of Bank Pacific, reads like the plot of a TV soapie. Endang is the daughter of Ibnu Sutowo, former managing director of state oil company Pertamina. First Endang turned Bank Pacific around. From a bank worth Rp 128 billion in assets and losing Rp 2 billion in 1989, she created such miraculous growth that by the end of 1994 assets were Rp 2.3 trillion (AU$ 1.3 billion) and profit Rp 24 billion (AU$ 13 million). Then her interests broadened to include mining, construction, tourism and real estate. Later, she invested heavily in shares in Singapore. Suddenly in 1995 news broke that Bank Pacific was unable to redeem bills it had underwritten to the value of hundreds of millions of rupiah. Its outstanding debt amounted to Rp 2.1 trillion (AU$ 1.2 billion) no less. As a consequence, Endang was ejected from the board and replaced as managing director by Sanusi Lubis who, with a team from Bank BNI, had been assigned by Bank Indonesia the task of 'rescuing' Bank Pacific.
Complaint
Endang's problems only surfaced when PT Wicaksana Overseas International (WOI) lodged a complaint against Bank Pacific and PT Pacific International Finance (PIF) - also owned by Endang -because commercial paper (CP) issued by them was not able to be cashed. The biggest loan default occurred following the take-over by Endang from PT Gelora Binamaju of the development company PT Pengembangan Agrowisata Prima (PAP) and its Resor Lido tourism, housing, hotel and golf course project in Sukabumi, West Java. This huge project had been expected to yield big returns for PAP, but was abandoned before completion. From 1990 onwards, Endang had also expanded her business interests in Singapore. She was involved in the development of the major Bugis Junction office and trade complex there through her Virgin Islands company Montien International. Endang through Nine Heritage Pty Ltd also purchased a 28.52% holding in a Singapore subsidiary of Goodman Fielder, Australia, later known as the Auric Pacific Group, for a price said to have reached S$ 138 million (AU$ 128 million). So where did Endang get all the money to finance this expansion of her empire? Evidently between 1992 and the middle of 1995 she issued promissory notes (CP) through her company PIF which was under the control of Adrian Waworuntu. They were underwritten by Bank Pacific. The notes, mostly issued for terms of six months, were used to pay off earlier debts as they fell due.
Breach
Bank Pacific could have redeemed the notes at maturity. However the repayments would have gone through Bank Pacific's books and so would have come to the notice of Bank Indonesia and been observed to be in breach of regulations limiting the maximum volume of loans. Thus, failing connivance with someone in Bank Indonesia, the alternative was to pay off maturing CP notes with the proceeds of new CP notes. And CP notes carry a very high rate of interest. For a six month term, PIF would have to pay 11.5%. Substantial profits also accrued to the broker because there was a fee of about 10% for the sale of a CP note, twice the normal brokerage rate. Total debt by 1995 was over Rp 1 trillion. The buyers of the CP notes were WOI and tens of state-owned and private companies. It became clear the notes could not be cashed. Bank Indonesia, for reasons not altogether clear, increased its share holding from 38% to 51%. Then there were replacements at board level, with Bank BNI supplying the new board members. Endang Utari was among those replaced in October 1995. It is thought that PIF still had sufficient funds to pay its debts but simply chose not to pay. So it is that the state will bear the consequences. In March this year Endang sold some of her shares in Auric Pacific to the Lippo Group and Hotel Prapatan Jakarta. Strangely enough the proceeds of this sale of shares were not paid into Bank Pacific. None of this money went towards paying off her debts. Out of it all the state stands to lose billions of rupiah, because 51% of Bank Pacific's shares are owned by Bank Indonesia.
Suara Independen June 1997.
