Bank Bali row hits Standard

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The Independent Online
A POLITICAL storm in Indonesia is casting a shadow over plans by Standard Chartered to take management control of Bank Bali, a leading local bank.

The International Monetary Fund, which is co-ordinating a $45bn restructuring package for Indonesia, said yesterday that it viewed with concerns developments at the bank. Bank Bali is at the centre of a corruption scandal following allegations that it paid an $80m fee to help officials of the ruling Golkar party buy votes in the country's national assembly last year.

The payments came to light during routine due diligence investigations of the bank's accounts by Standard Chartered's advisers, sparking accusations from Rudy Ramli, Bank Bali's former president, that Standard Chartered was involved in underhand attempts to oust him.

Following a meeting between Stanley Fischer, deputy managing director of the IMF and Indonesia's president, BJ Habibie, over the weekend, the IMF yesterday called for a "thorough and independent investigation" into the Bank Bali case.

The IMF is concerned that the row is threatening to undermine Indonesia's attempts to refloat its banking system and regain the confidence of international investors. Jusuf Anwar, head of Indonesia's capital markets supervisory agency, yesterday compounded Bank Bali's woes saying that the agency was investigating possible insider trading at the bank.

The scandal has been mentioned by foreign exchange dealers as one of the main reasons for a sudden slide in the value of the rupiah, Indonesia's currency last week.

Standard Chartered struck a deal last month with the Indonesian Bank Restructuring Agency (IBRA) allowing it to take a 20 per cent stake in the bank following a restructuring this autumn.