Jakarta - An official from Indonesia`s ruling Golkar party had been formally

charged in connection with a bank scandal that rattled markets and sent

tremors through the country`s political landscape, his lawyer said

yesterday.

Setya Novanto, a deputy treasurer of Golkar, was charged with breaking

banking laws after questioning by police, said OC Kaligis, his lawyer. "He

has been charged with breaching bank laws," Kaligis said.

A police spokesman could not comment on details of the investigation, but

confirmed Novanto had been questioned.

The Bank Bali scandal has shaken financial markets. Some analysts said it

threatened President BJ Habibie`s chances of retaining power in November`s

presidential elections.

The controversy revolves around payment of more than $70 million by Bank

Bali to a firm run by Novanto to help recover loans from the Indonesian Bank

Restructuring Agency. Opposition parties allege the money was destined for

Habibie`s re-election fund. But Habibie insists he received no money.

Indonesia`s opposition said the saga must be fully investigated. It warned

of attempts to make scapegoats of lower-level figures and protect the

masterminds.

The World Bank and International Monetary Fund (IMF) have threatened to cut

off assistance to Indonesia if the case was not properly investigated and

resolved.

The billions of dollars pumped into Indonesia`s economy by foreign donors

are crucial for keeping the beleaguered economy afloat.

The IMF has demanded an independent audit of the central bank as part of the

investigation into the issue. Indonesia has agreed to let

PricewaterhouseCoopers help with an audit, but it is not clear how much

freedom the firm will be given.

Analysts say a truly independent bank audit might uncover issues that

officials would be anxious to keep hidden. - Reuters