KEY CORRUPTION INVESTIGATION CONTINUES

C O N F I D E N T I A L SECTION 01 OF 02 JAKARTA 002037 SIPDIS DEPT FOR EAP, EAP/MTS, EAP/MLS, INL INL FOR ROESS/BARCLAY DEPT FOR EEB/IFD/OMA DOJ/OPDAT FOR LEHAMNN/ALEXANDRE/JOHNSON MCC FOR LONGI SINGAPORE FOR BAKER TREASURY FOR M.NUGGET NSC FOR E. PHU E.O. 12958: DECL: 11/05/2018 TAGS: PGOV KJUS KCOR ID SUBJECT: KEY CORRUPTION INVESTIGATION CONTINUES REF: JAKARTA 2003 AND PREVIOUS JAKARTA 00002037 001.2 OF 002 Classified By: Pol/C Joseph L. Novak, reasons 1.4(b+d). ¶1. (C) SUMMARY: Indonesia's Corruption Eradication Commission has interrogated Aulia Pohon--a relative by marriage of President Yudhoyono--and three other former Bank Indonesia (central bank) officials. The four were released following the interrogation, but remain as suspects in a wide-ranging case that involves fraud committed in the aftermath of the Asian Financial Crisis of 1997-98. President Yudhoyono, who has made anti-corruption efforts a signature issue, has reiterated that he will not interfere in the case in any way. END SUMMARY. ¶2. (C) INTERROGATIONS: A key corruption case is continuing. On November 3, Indonesia's Corruption Eradication Commission (KPK) interrogated Aulia Pohon--the father-in-law of one of President Yudhoyono's sons--and three other former BI deputy governors. After they were questioned at KPK headquarters for six hours, the four were released on their own recognizance. The four were officially named as suspects in the case on October 29 (see reftel),but have not been yet been formally charged with a crime. (Note: Pohon--currently a businessman--is the father-in-law of Captain Agus Harimurti Yudhoyono, the president's eldest son, a member of the Indonesian military. Yudhoyono, 30, is married to Annisa Larasati Pohon, a former model.) ¶3. (SBU) A CASE INVOLVING SERIOUS ALLEGATIONS: The four are suspects in a wide-ranging case that involves fraud committed in the aftermath of the Asian Financial Crisis of 1997-98. The former BI officials allegedly helped oversee the unlawful disbursement of Indonesian Banking Development Foundation (YPPI) funds to 52 former members of the national legislature (DPR) and five former BI officials in 2003 (see reftels). The money was given in exchange for resolving the BI liquidity support scandal, commonly known as "BLBI." The BLBI matter concerns emergency liquid credits extended by BI to commercial banks during the financial crisis, which began in 1997. Of the $16 billion BLBI loans issued since 1997, approximately a third turned bad. ¶4. (SBU) The case has already yielded results. On October 29, former BI Governor Burhanuddin Abdullah was sentenced to five years in prison and fined $25,000 by the Anti-Corruption Court (ACC) for his involvement in the case. On October 27, two other BI officials were charged for their alleged involvement in the BLBI case. The former head of the BI legal bureau, Oey Hoey Tiong, and the former head of communications, Rusli Simanjuntak, each face a possible six-year prison sentence and $50,000 fine for their involvement in the unlawful disbursements. ¶5. (C) PRESIDENT UNDERSCORES HE WILL NOT INTERFERE: At this point, the fact that a relative by marriage has been linked to the probe does not seem to be hurting the President politically. Yudhoyono has reiterated that he will not interfere in any way in Pohon's case. In his statements to the press, the President has said that although he was personally saddened, he would not intervene on behalf of his relative. He has added that he will not intervene if Pohon is found guilty. By playing it strictly by the book, Yudhoyono has taken the right tack, maintaining his image as an anti-corruption reformer. JAKARTA 00002037 002.2 OF 002 HUME