LPEI Entangled in Corruption Case: How Much Non-Performing Financing is Involved?

Sri Mulyani, Minister of Finance, has reported alleged corruption within the Indonesian Export Financing Institution (LPEI) to the Attorney General's Office (Kejagung). The report was filed on Monday, March 18, 2024.

According to Katadata, at least four companies are implicated in the alleged corruption case related to LPEI's export financing facilities worth Rp2.5 trillion.

These companies operate in the palm oil, coal, nickel, and shipping sectors. The Attorney General's Office suspects that the four companies committed fraud in relation to the financing facilities they received from LPEI.

The Attorney General's Office has been detecting this fraud since 2019. ST Burhanuddin, the Attorney General, revealed that the four companies experiencing non-performing loans and suspected fraud are PT RII (Rp1.8 trillion), PT SMS (Rp216 billion), PT SPV (Rp144 billion), and PT PRS (Rp305 billion).

"These four companies operate in the palm oil, coal, nickel, and shipping sectors. This is only the first phase [of the investigation]; there will be a second phase," said Burhanuddin in a press conference with Sri Mulyani at the Attorney General's Office in Jakarta on Monday, March 18.

Burhanuddin stated that the second phase will involve six other companies with credit totaling Rp3 trillion. These six companies are still under investigation.

(See also: Profile of LPEI, the Company Implicated in Alleged Rp2.5 Trillion Credit Corruption)

Problematic Financing

The corruption allegedly involved the channeling of export financing to debtors without proper corporate governance processes and in violation of LPEI's credit policies.

This could impact the increasing ratio of non-performing loans (NPF) and affect the company's financial health.

Based on its financial statements, LPEI had restructured its financing and receivables based on collectability in September 2023. The details are as follows:

* Under special attention: Rp18.98 trillion
* Non-performing: Rp15 trillion
* Performing: Rp8.32 trillion
* Substandard: Rp802.55 billion
* Total: Rp45.82 trillion
* Allowance for impairment losses: (Rp14.69 trillion)
* Net: Rp31.12 trillion.

Meanwhile, the ratio of financing and receivables classified as NPF/NPL was a gross NPF of 28.37% in September 2023. This figure is 1.76 percentage points higher than in December 2022, which was 26.61%.

The net NPF of the company, known as Indonesia Eximbank, was 10.39%, unchanged since December 2022.

(See also: Bank Credit Disbursement Up 7.76% as of June 2023, Non-Performing Loans Down)