JPMorgan's Dimon's aggressive style may hurt bank cause

Reuters, by Rachelle Younglai and Philipp Halstrick, WASHINGTON/FRANKFURT,  Thu Sep 29, 2011

Jamie Dimon, CEO and chairman of JPMorgan Chase & Co., poses for
 a portrait in his office in New York, in this photo taken December 22, 2010.
(Credit: Reuters/Lucas Jackson)

(Reuters) - Masters of the universe are not always so masterful after all.

JPMorgan Chase Chief Executive Jamie Dimon's squabble with the head of the Bank of Canada over bank regulation managed to achieve only one thing -- angering the central banker.

Once viewed as a star for helping the U.S. government prop up the now-defunct Bear Stearns during the 2008 financial crisis, Dimon is in danger of becoming a pariah among global regulators.

At a meeting last week between the world's most powerful bankers and Bank of Canada Governor Mark Carney, Dimon tried to tell the central banker that banks were suffering under the weight of all the new bank rules. But his aggression drove a red-faced and visibly angry Carney out of the room, according to people familiar with the encounter.

Dimon referred to new global bank liquidity rules as "cockamamie nonsense," according to one of the attendees at the closed-door meeting held by the Institute of International Finance on Friday.

Dimon also said the rules did not bear any relation to financial reality and that they were constructed by regulators, academics and people who did not have any market experience, the attendee said.

Major banks have lashed out at the slew of new rules being implemented in response to the financial crisis. They contend higher capital standards and other new regulations will impede their ability to lend and hurt the already-fragile economy, although their arguments appear to be falling on deaf ears with regulators.

Another person at the meeting said Dimon acted very aggressively and complained about a plan from the Basel committee of global regulators to force the world's biggest banks to hold up to 2.5 percent in extra capital.

Carney, who spent more than decade at Goldman Sachs before becoming Canada's central banker, was calm at first and tried to appease Dimon, responding: "I hear what you are saying. I don't think it will surprise you that I am taking a different view. These are reasonable responses to the financial crisis," one of the attendees recalled.

But Dimon grew increasingly aggressive, prompting Bank of Nova Scotia CEO Rick Waugh to jump in to try to smooth relations, the source said.

The outspoken Dimon has already blasted the new international bank rules as anti-American and went a step further at the meeting. "I have called it anti-American. The only reason I am calling it anti-American is because I am American. I also think it's anti-European," the attendee recalled him saying.

In the end, an agitated Carney left in the middle of Dimon's tirade. Other chief executives such as Goldman Sachs' Lloyd Blankfein and Deutsche Bank's Josef Ackermann looked stunned, the sources said.

Ackermann tried to explain why Carney left abruptly, saying the central banker was on a tight schedule.

Some bankers were shaking their heads. "It was Dimon's style that astonished all bankers, not the content," said one banker familiar with the meeting. Another voiced concern that Dimon's anger hurt his message. Others said they thought Dimon's comments were appropriately delivered.

Once singled out by President Barack Obama for running a well-managed bank, Dimon has become increasingly more vocal in his opposition to the new bank rules. For over a year, he has fought the administration privately and publicly over the Dodd-Frank regulation bill.

In June, Dimon took U.S. Federal Reserve Chairman Ben Bernanke to task and said new financial regulations could jeopardize the country's economic recovery and job creation.

At the time, he was praised for speaking out. But Dimon may have exacerbated the already-tense relations between the banking community and its financial supervisors with his latest exchange, first reported by the Financial Times.

On Monday, Dimon called Carney to put his comments in context, a source close to Dimon said. Dimon told the central banker that he had the utmost respect for him and that he thought the world of him, the source said.

But that was too late for Carney, who is rumored to be in line to become the next head of the Financial Stability Board -- a body of international regulators that makes policy recommendations to the Group of 20 economies.

The Bank of Canada and JPMorgan both declined to comment.

Two days after the encounter, Carney rejected bankers' complaints in a public speech to the IIF, a lobby group for global banks.

"If some institutions feel pressure today, it's because they have done too little for too long rather than being asked to do too much too soon," Carney said on Sunday.

"While the worsening global economic outlook has implications for bank performance, it does not provide a rationale for delaying the implementation of Basel III (bank capital rules,)" he said.

(Additional reporting by Louise Egan in Ottawa, Lauren LaCapra in New York and CameronFrench in Toronto; Writing by Rachelle Younglai; Editing by Dan Grebler)

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Big Four auditors face massive shake-up

Big Four auditors face massive shake-up

Reuters, by Huw Jones, LONDON, Tue Sep 27, 2011

(Reuters) - The "Big Four" global auditors could be broken up, leaving them susceptible to takeovers if radical European Union plans to boost competition go ahead, a UK auditing official said on Tuesday.

EU Internal Market Commissioner Michel Barnier is due to publish a draft law in November to curb what he sees as a conflict of interest when auditors check the books of and supply lucrative consultancy services to the same customer.

Auditors, KPMG, Ernst & Young, Deloitte and PwC, audit nearly all big companies in the world, often serving the same clients for decades.

A copy of Barnier's draft law seen by Reuters proposes that auditors be banned from offering consultancy services to the companies they audit, or even banned from consulting altogether -- a move that could force the firms to split their operations.

"Breaking up the Big Four audit firms would make them more susceptible to be taken over by emerging Chinese firms," a UK audit official said on Tuesday on condition of anonymity due to the sensitivities involved.

Barnier's spokeswoman said he has made it clear that the audit sector displayed clear failings during the crisis, giving banks a clean bill of health just before they were rescued.

He has trailed his plans for a year and the industry had hoped they would be watered down by the time he formally proposed them next month.

"To reinforce independence and professional skepticism, the prohibition of the provision of non-audit services to the audited entities and even the prohibition of the provision of non-audit services in general would effectively address this issue," the draft said.

"Better audits and more informative audit reports will enhance confidence in the markets while also informing stakeholders of any problems with regards to any particular entity," the draft added.

The EU plans go much further than the United States, another major base for the Big Four, where the standard setter PCAOB is mulling requiring firms to switch auditors regularly, but has stopped short of recommending audit-only firms.

BREAK UPS

Deloitte said it supports improving audit quality but rejects joint audits, mandatory rotation and tendering, and a complete ban on non-audit services.

Rolf Nonnemmacher, co-chairman of KPMG Europe, said the reform goes as far as a breakup of the best performing firms.

"The implementation of these proposals would lead to a massive reduction in quality of audits, to the detriment of companies. In addition this would impose high costs on companies," Nonnemmacher said.

Ernst & Young had no immediate comment, while PWC said there was no evidence that the radical measures would improve audit quality.

However, auditor Grant Thornton, which along with peer BDO has tried to end the stranglehold of the Big Four, welcomed Barnier's plans.

"While we believe there could be some implementation issues, we still applaud what the Commissioner is attempting to achieve," a Grant Thornton spokesman said.

Accounting officials believe the Big Four would be forced to choose between auditing or consultancy.

"It would certainly mean a different profession," said Michael Izza, chief executive of the UK accounting body ICAEW.

The ACCA, another UK accounting body, said it was unclear whether imposing extensive rules and curbs was the best way to promote independence and skepticism.

The European Parliament, which will have the final say with EU states, has broadly backed the plans.

Auditing industry officials estimate that 28-30 percent of global revenues come from statutory audits, with about 18 percent from non-audit services provided to the same audit client. This means that about half of total revenues is earned from providing consultancy services to clients which are not being audited as well.

Britain, as home to the Big Four's European base, is likely to oppose some of Barnier's more radical proposals though its Office of Fair Trading said in July a full-blown competition probe into the sector is warranted.

Accounting officials say such a probe would become redundant if Barnier's draft makes it onto the statute book.

"If I was the UK Competition Authorities I would be inclined to leave this up to Europe. It's not a UK issue, it's actually a global issue," the auditing official said.

Other elements of the draft regulation include:

• Regular dialogue between auditors and their regulators about the firms they audit, a move aimed largely at banks;
  
• A company would have to change or "rotate" auditors every nine years to end the custom of decades-long auditing by the same firm;
  
• A ban on covenants whereby banks insist that a company receiving a loan must be audited by one of the Big Four;
  
• Introduction of "joint audits," so that the Big Four share auditing work with smaller rivals. Would apply to companies whose balance sheet is above 1 billion euros;
  
• The European Securities and Markets Authority to play a coordinating role in supervising auditors in the EU;
  
• Making international auditing standards mandatory.

(Reporting by Huw Jones; Additional reporting by Juliane von Reppert-Bismarck in Brussels, Kathrin Jones in Frankfurt and Dena Aubin in New York; Editing by Erica Billingham and Helen Massy-Beresford)

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Asia’s Wealthiest Avoid Banks, Opt For Family Offices

Jakarta Globe, Netty Ismail, September 26, 2011

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Singapore. Stephen Diggle, co-founder of a hedge fund that made $2.7 billion for investors in 2007 and 2008, set up a family office in Singapore to manage the millions in fees he earned instead of entrusting his wealth to private bankers.

“It was fairly demonstrably clear that there was a very significant problem of alignment of interests by private banks and their customers,” said the 47-year-old founder of Vulpes Investment Management, whose Singapore-based family office has invested in hotels in Japan and farms in Uruguay. “They ceased to be custodians of people’s money and they became salesmen.”

Asia’s wealthiest investors, whose ranks are swelling as the region’s economic growth outperforms the rest of the world, are turning to family offices to maintain control of their money after the collapse of Lehman Brothers Holdings in 2008 made them more risk averse.

“Private banks try to sell you everything and not necessarily what’s best for your family office or for yourself,” said Clinton Ang, managing director of Singapore- based wine and spirits distributor Hock Tong Bee, who also prefers to manage his family’s wealth himself. “If sophisticated investors haven’t already learned the lessons of the past crisis, with the impending crisis that is on the horizon, they’d better.”

The MSCI World Index has tumbled 17 percent from this year’s high in May and is trading close to a one-year low after Standard & Poor’s stripped the United States of its AAA credit rating and Europe’s debt crisis deepened.

About 90 percent of Ang’s investable assets are in cash after he sold from October through March its investments in stocks, bonds and most property assets, said the 38-year-old, who describes himself a follower of Templeton Asset Management’s Mark Mobius.

Family offices are typically tailored to the families’ personal needs, and often include estate planning, philanthropy and lifestyle management such as maintaining homes and yachts. Private wealth managers at global investment banks rely on fees and commissions from managing their clients’ money.

Most family offices in Asia are more defensive in their investment strategy and tend to hire a “generalist” to manage their wealth, rather than specialists such as former hedge fund managers, said William Chan, chief executive officer of Singapore-based Stamford Privee, which manages his family’s wealth and that of two others. Such managers may cost between $300,000 and $400,000 a year, while specialists would be more expensive, Chan said.

Wealthy families tend to choose investment professionals they had previous dealings with, such as a private banker, as their office manager, said Chan. Others may select an ex-investment banker who advised them on transactions such as an initial public offering of their company.

“Being the trusted adviser is key,” Chan said.

Wealth in Asia, excluding Japan, is expected to rise at about double the global rate of almost 6 percent through the next five years, the Boston Consulting Group said in a May report. Singapore will be the world’s top wealth management center by 2013, overtaking Switzerland and London, a PricewaterhouseCoopers study published in June shows.

Asia is also attracting overseas family offices. “Anecdotally, we are seeing more European family offices inquire about setting up their Asian headquarters to participate in the Asian growth,” said Amy Lo, head of ultra-high net worth in Asia-Pacific at UBS AG’s wealth management business.

About 62 percent of US-based family offices surveyed this year said they were considering increasing allocations to Asian markets outside Japan, according to Family Office Exchange.

Some family offices cater to more than one family to gain economies of scale. It costs at least $1.5 million a year to run a family office that includes an investment team, and a family will need a minimum of $100 million to justify the expenses, said Chan of Stamford Privee.

Blue Ocean Capital Partners, a unit of Singapore-based private-equity firm Tembusu Partners, plans to set up an office with a UK-based family firm this year, said director Daniel Lin.

Lin, 28, said he and his 54-year-old father, who founded Tembusu Partners, will start by managing their family wealth with a chief executive officer. At least two other families have agreed to partner with them later, he said.

“For private banks, because they have certain targets, they need to find something that will give them a financial return pretty quickly,” Lin said. “For us, we’re not in a hurry to make money out of this; we have time to build on the intangibles such as family values and governance.”

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Farmers Celebrate at Plantation Law Court Victory

Jakarta Globe, Ulma Haryanto, September 20, 2011

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The Constitutional Court approved on Monday a request to drop two articles in the 2004 Law on Plantations deemed potentially discriminatory against indigenous farmers in land disputes.

The request was originally filed by four farmers from West Kalimantan, East Java and North Sumatra.

Each farmer had received jail terms of between six months and a year under Article 21 of the 2004 law for protest actions they took to reclaim ancestral lands.

The article prohibits any efforts to damage plantations or other assets, any use of plantation land without permission and any other action that disturbs plantation businesses.

The punishment for violating the law is a maximum jail term of five years and a fine of up to Rp 5 billion ($565,000).

The plaintiffs were Sakri, a 41-year-old farmer from Blitar, East Java; Japin, 39, and Vitalis Andi, 30, from Ketapang, West Kalimantan; and Ngatimin, 49, from Serdang Bedagai, North Sumatra.

Chief Justice Mahfud M.D. ruled that the two articles were unconstitutional and no longer binding. He said land conflicts between indigenous farmers and non-indigenous populations should be settled through the civil court system or by mediation.

Wahyu Wagiman from the Institute for Policy Research and Advocacy (Elsam), who represented the plaintiffs, welcomed the ruling as a relief to more than 600 traditional communities in the country that were threatened by the law.

“Our next step is to spread the word as wide as possible and to find a way to release farmers currently charged under Articles 21 and 47, including Japin, Vitalis and Ngatimin,” Wahyu said.

Japin and Vitalis each served 10 months in jail for “displacing” an excavator that was about to be used to clear land they were contesting in 2009.

The pair filed an appeal in March. Ngatimin was sentenced to one year in jail for planting trees in a disputed area in an effort to reclaim it in 2007.

“The ruling can be presented as new evidence at the Supreme Court, which is now reviewing their cases,” Wahyu said.

Sakri already served six months of probation in 2008 for forcefully trying to reclaim land.

The judges agreed the law had ignored the historical context of land ownership in Indonesia.

“The wide variety of land disputes should be solved thoroughly by involving NGOs and academics, and this is not reflected by Article 21,” Judge Achmad Sodiki told the court.

The law was widely criticized when it was passed for failing to protect the interests of small-scale farmers and indigenous communities and for giving big business too much power.

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Cabinet reshuffle necessary, legislator says

AntaraNews, Sat, September 17 2011

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Jakarta (ANTARA News) - A reshuffle of President Susilo Bambang Yudhoyoo`s present cabinet is necessary, a National Mandate Party (PAN) member of the House of Representatives, Teguh Juwarno, said here on Saturday.

"A cabinet reshuffle should be conducted to remove ministers who have proven unable to perform optimally," Teguh said at a Halal Bihalal friendship gathering at Reform Star Party (PBR) chairman Bursah Zarnubi`s residence.

The House member from the PAN faction said that now was the right time for President Yudhoyono to reshuffle his cabinet to prove that he pays attention to the people`s aspirations.

"A cabinet reshuffle is necessary for President Yudhoyono`s leadership to be remembered as a successful state leader who is able to make his people prosper," said Teguh, a member of House Commission-I.

Besides, he added that the cabinet reshuffle should be made in order to improve the performance of the second United Indonesia Cabinet.

Asked which ministers who would be replaced, Teguh refused to comment further.

"It could be anyone, because the president has had an input from the people and thus it is time for him to take action as soon as possible," Teguh said.

The discourse about cabinet reshuffle came up after a lot of minister were found to have failed to work optimally as expected.

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FBI says training lecture critical of Islam ended

Associated Press, By PETE YOST, Sep 15, 2011

WASHINGTON (AP) -- The FBI says a lecture at the bureau's training academy that was critical of Islam has been discontinued.

Senators blast FBI's anti-Muslim
manuals (RT.com)

The bureau employee who gave the lecture contended, among other things, that the more devout a Muslim is, the more likely he is to be violent.

A federal law enforcement official, speaking on condition of anonymity about the internal FBI training issue, says the lecture was given for just three days last April.

FBI spokesman Christopher Allen says that in the aftermath of the lecture, policy changes have been under way to better ensure that all training is consistent with FBI standards.

The online publication Wired.com first reported on the instruction given to agents.

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".... If an Arab and a Jew can look at one another and see the Akashic lineage and see the one family, there is hope. If they can see that their differences no longer require that they kill one another, then there is a beginning of a change in history. And that's what is happening now. All of humanity, no matter what the spiritual belief, has been guilty of falling into the historic trap of separating instead of unifying. Now it's starting to change. There's a shift happening...."

Goldman, Morgan in Talks to Buy Indonesian Brokers: Sources

Maligned at Home, Bakrie Group Is the Face of Indonesia Inc. Around the World

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Govt Prepping Stimulus as Hedge Against Global Crisis

Jakarta Globe, September 15, 2011

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The Indonesian government is preparing a draft stimulus package as part of efforts to anticipate the impact of the global crisis that is expected to continue until early 2012, Finance Minister Agus Martowardojo said.

“In response to what is happening in Europe today we have thought of a stimulus package expected to be introduced in the first semester of 2012,” he said at a working meeting with the House of Representatives Commission XI here on Thursday.

The stimulus package would function as a means to anticipate any possible impact of the global crisis on the Indonesian economy as a whole, he said.

“We are of the view if what is happening in Europe is to continue it will most likely affect our trading partners or countries investing in Indonesia,” he said.

Meanwhile, Bambang Brodjonegoro, acting chief of the Finance Ministry’s fiscal policy board, said current global economic conditions had the potential to prove worse than the 2008 financial crisis that engulfed much of the world.

According to him, the current global crisis did not directly affect Indonesia but its trading partners.

“The current crisis may deal a heavier blow compared with 2008, although Indonesia and other emerging countries have better economic conditions than developed nations,” he said.

He said the government was still studying the plan for a stimulus package, and that any further details had yet to be decided.

Antara

Indonesian Economy Performing Well: ADB

Jakarta Globe, September 14, 2011

The Asian Development Bank on Wednesday upped Indonesia’s forecast
for economic growth from its April outlook while inflation forecasts were
 trimmed for 2011 and 2012. (AP Photo/File) 

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Hong Kong. The Asian Development Bank is trimming its forecast for economic growth in developing Asian countries because of worries about weak demand from key trading partners including the US and Europe.

The ADB said on Wednesday that it is lowering its 2011 growth forecast slightly to 7.5 percent from 7.8 percent previously for 45 Asian countries.

The bank is also cutting its 2012 forecast to 7.5 percent from 7.7 percent.

The Manila-based lender said the slowdown in demand from the United States and Europe “continues to cast a cloud over the region,” with export growth easing off in the second quarter.

Inflation also remains a “threat,” with consumer price inflation predicted to average 5.8 percent this year before cooling off to 4.6 percent in 2012.

Indonesia’s forecast for economic growth was upped from ADB’s April outlook while inflation forecasts were trimmed for 2011 and 2012.

The economic growth rate increased to 6.5 percent in the first half of the year due to “stronger investment, private consumption and robust exports.”

Inflation decreased from 7 percent in January 2011 to 4.8 percent in August.

Growing employment in Indonesia contributed to a 4.5 percent rise in private consumption. The unemployment rate fell to 6.8 percent from 7.4 percent from a year earlier. However, job creation, especially for workers between 15 and 24, is still a challenge.

“About 18 percent of the young people who had joined the workforce by August 2010 were unemployed, or six times as high as the rest of the workforce,” the report said.

Despite the growing number of imports, net exports expanded. It is forecast that 15 percent of the government’s total expenditure will be spent on subsidies for electricity and fuel.

Indonesia saw its best performance in five years with manufacturing output expanding by 5.6 percent with textiles, iron and steel leading the increase. While foreign direct investment inflows were the highest in 10 years at $10 billion.

The report concluded that, “Taking these factors into consideration, the forecasts for GDP growth are raised slightly from April to 6.6 percent this year, and to 6.8 percent for 2012 based on the improving outlook for investment next year.”

AP, JG

Goldman, Morgan in Talks to Buy Indonesian Brokers: Sources

Jakarta Globe, September 12, 2011

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Goldman Sachs and Morgan Stanley are each in talks to buy an Indonesian brokerage firm to expand their reach into the booming capital market of Southeast Asia’s biggest economy, sources said.

Goldman is in talks to buy Tiga Pilar Sekuritas and expects to complete the acquisition before the end of 2011 as it aims to start a local brokerage operation next year, two sources with direct knowledge of the deal told Reuters on Monday.

Goldman does not have an underwriting or broking license in Indonesia, while Morgan Stanley secured an underwriting licence in 2008, but is seeking a bigger presence through a full-fledged broker license.

Both banks plan to add research analysts as well as sales and trading staff to the brokerages next year, while Goldman could also add investment bankers, as they seek to win fees from equity offerings and debt deals, the sources said.

“I think this signals a positive view on our capital market ... It has really become an important destination for global investment banks,” said Winston Sual, who manages nearly $1 billion in funds at Panin Sekuritas in Jakarta.

“This will give more competition for fees among global bankers like JPMorgan and Credit Suisse.”

The banks’ plans in Indonesia, which has seen its stock market hit records this year on surging foreign investment, follow moves by Nomura Holdings and Citigroup to ramp up equity research teams in Jakarta this year to challenge leaders Credit Suisse and Deutsche Bank.

Investment interest in the G20 member is set to rise again next year, when Indonesia hopes to get an upgrade by Fitch Ratings to an investment grade sovereign rating that will put it alongside top emerging BRIC nations such as Brazil. 

Goldman has completed due diligence for Tiga Pilar and both parties are now negotiating the deal structure and valuation, said one of the sources, who all declined to be identified.

“Goldman has already asked Tiga Pilar to start looking for prospective staff and bankers as a precondition before they complete the deal,” said the source. No financial details were immediately available.

Officials at Tiga Pilar and Goldman declined to comment.

The Tiga Pilar deal size is likely to be small as Goldman is only seeking to buy the operating licenses that the deal will provide. It will need to at least inject the Rp 50 billion ($6 million) in license costs and required brokerage capital.

Tiga Pilar, partly owned by the family of Tan Pia Sioe, traded Rp 445 billion by stock value in the first six months of this year, ranking it 102 out of 117 active brokerages, according to stock exchange data.

The IDX composite index has jumped over 5 percent so far this year, topping the list of gainers in Southeast Asia. 

Goldman’s rival Morgan Stanley has also identified a target brokerage firm to acquire and hopes to conduct due diligence this year in order to start operations next year, said three other sources with direct knowledge of this deal.

“Talks are ongoing. It is still early to mid-phase. Morgan Stanley is talking to people,” said one of the sources. Sources declined to give the name of the target brokerage and no financial details were available.

A Morgan Stanley spokesman declined to comment. The talks are aimed at either buying a brokerage to get their seat on the stock exchange or to buy a seat from an existing brokerage, one of the sources said.

A full broking license would allow the firm to cover the secondary side of sales and trading as well as research, the source added.

Citigroup bought Indonesian brokerage Republik last year and this year added bankers and analysts, including veteran analyst Ferry Wong from Macquarie as its new head of research.

Citi was not in the top five for underwriting Indonesian equity deals last year but this year has surged up the league table to rank second among global banks, behind Deutsche.

Reuters

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SEA Games Trial: Sports Ministry Official Faces Up to 20 Years in Jail

Jakarta Globe, Ulma Haryanto, September 08, 2011

The Suspended Secretary to the Minister of Youth and Sports, Wafid Muharam,
 during the first day of his trial at the Corruption Court in Jakarta on Wednesday.
 Bribery charges against Wafid see him facing a maximum of 20 years in jail.
(JG Photo/ Yudhi Sukma Wijaya) 

  

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The bribery trial of the suspended secretary of the Sports and Youth Affairs Ministry opened on Wednesday, in what is likely to be just the first in a string of high-profile prosecutions in a corruption case linked to Muhammad Nazaruddin.

Wafid Muharram was on Wednesday indicted on charges of accepting a Rp 3.2 billion ($374,000) bribe in connection with a contract to build an athletes’ village in Palembang for the Southeast Asian Games in November.

The choice of charge means he could face a maximum of up to 20 years in prison if convicted.

He is the first official to face charges in a case that has already brought down Nazaruddin, the former treasurer of the ruling Democratic Party, and is threatening to derail the careers of more politicians and officials.

In Wednesday’s opening session, prosecutors said Wafid had demanded a payoff from Duta Graha Indah, a construction company owned by Nazaruddin, for helping it win the contract for the athletes’ village.

Wafid was arrested in April, along with DGI’s marketing director, Muhammad El Idris, and Mindo Rosalina Manulang, who allegedly brokered business deals on behalf of Nazaruddin.

In separate trials on Wednesday, prosecutors demanded a four-year jail sentence and Rp 200 million fine for Rosalina, and a 42-month jail sentence and Rp 150 million fine for Idris.

In Wafid’s trial, Agus Salim, a prosecutor, told the Anti-Corruption Court in Jakarta, “The defendant knew the checks were given in relation to his effort in helping DGI win the project.”

Wafid had authority to issue and sign a decree on the construction of the athletes’ village and to disburse the funds for it. He signed a decree allocating Rp 200 billion from the ministry’s budget to the South Sumatra committee overseeing the construction, and DGI was announced the winner of the contract, valued at Rp 192 billion.

When testifying in the trials of Rosalina and Idris, Wafid insisted that the Rp 3.2 billion he is accused of taking as a bribe was a soft loan to the ministry and that such loans were normal.

Wafid has also said that he had asked Rosalina for Rp 6 billion to cover various operational expenses around March, because at the time state funds for the project had not yet been disbursed.

“I borrowed Rp 1 billion from Rosa in 2010 and paid it back via Paul Nelwan,” Wafid said, referring to one of several businessmen mentioned by Rosalina and Wafid as having close ties to the Sports and Youth Affairs Ministry.

Wafid’s lawyer, Erman Umar, said after the hearing that his client would appreciate some support from sports minister Andi Mallarangeng since he had put his neck out for the minister.

“Andi has never visited him in the detention center. He sent his aide once, to ask how Wafid was doing,” Erman said. “[Wafid] was trying to protect the minister from losing face, that’s why he was always looking out for loans to pay for the ministry’s various programs when state funds had not yet been disbursed.”