Indonesia bans Citibank issuing new credit cards

AP News
Posted: May 06, 2011 2:13 PM
Indonesia bans Citibank issuing new credit cards

Indonesian's central bank on Friday banned Citibank from issuing new credit cards and hiring debt collectors for two years after a customer's death.

The bans were imposed after a customer allegedly interrogated roughly by Citibank debt collectors in March died at a Jakarta branch of the bank.

Budi Rohadi, a deputy governor of Bank Indonesia, said the major U.S. bank also cannot receive new Citigold clients, those depositing 500 million rupiah ($58,000) or more in one year.

Separately in March, a senior vice president with Citibank Indonesia was arrested over a $1.7 million embezzlement of customers' funds.

The family of the dead customer, Irzen Octa, who led a small political party, have filed a lawsuit against Citibank, seeking $100 million for material loss and $200 million immaterial loss.

Octa, a Citibank customer for 30 years, went to the branch in southern Jakarta after being summoned by debt collectors. His lawyers said he owed Citibank $2,000 but was told by the debt collector that he owed $4,800.

Three debt collectors and two Citibank employees have been arrested. They will face up to 12 years in jail if convicted.

Citibank officials have denied that bank employees harmed Octa.

At least four other suspects, including the husband and brother of the senior vice president, have been arrested over the alleged embezzlement.

Rohadi said Citibank's operating license would be revoked if it is found to have committed bank crimes. Police and an anti-money laundering agency are still investigating.

Citigroup Inc. said in a statement: "We are committed to working closely with Bank Indonesia and taking the actions necessary to satisfy their concerns. We have already taken steps to strengthen our internal control processes. We have also hired 1,400 new staff to bring our collections process in-house. We will continue to implement the appropriate corrective actions in consultation with our regulator."


Pallavi Gogoi in New York contributed to this report.