A former military commander and businessman with sights on the Indonesian presidency has been arrested in connection with the alleged US$200 million letter of credit (L/C) scam apparently perpetrated by senior bank officials at Bank Negara Indonesia (BNI) (DC World News 4 November 2003 & 6 November 2003).

Meanwhile, as more details are revealed about the scandal that has rocked Indonesia's political establishment and dented confidence in the country's financial sector, banks with apparent connections to the alleged L/C frauds are explaining their positions.

Intensive questioning

Adrian Wiranto was arrested earlier this week and has been "questioned intensively" by investigators who suspect he may be involved in the BNI case, according to an Indonesian police spokesman.

Wiranto is one of several candidates seeking to become the former ruling Golkar Party's nominee for the July 2004 presidential election.

Companies implicated

The former military commander is a co-owner of the Gramarindo Group that, along with the Petindo Group, is said to have been one of the companies named in BNI documentation related to L/C transactions for the export of quartz sand to Congo and Kenya.

Police have already detained several BNI employees, including head of the Kebayoran Baru branch's foreign customer service division Edi Santoso. He has reportedly said he met with Wiranto on two occasions earlier this year. Wiranto denies involvement in the case and denies ever meeting Santoso.

Internal procedures

The Wall Street Banking Corporation, a Cook Islands bank named in the scandal, says its internal procedures helped uncover wrongdoings amongst BNI officials.

Michael Innes-Jones, director of the bank says misuse of the L/Cs was noticed by staff who subsequently notified the authorities on the Cook Islands and the Indonesian bank.

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