Indonesian authorities are investigating allegations of illegal loans linked to the bankruptcy of Sritex, the country’s largest textile and apparel manufacturer, raising concerns over potential fallout for Korean banks involved in the company’s financing.
On May 5, Harli Siregar, head of the Indonesian Prosecutor’s Legal Information Center, said during a press briefing that prosecutors had questioned several bank witnesses as part of a corruption probe into Sritex.
“The alleged bank corruption is related to the provision of unauthorized loans to Sritex,” he stated. “At this stage, it remains a general investigation, with investigators focusing on identifying signs of corruption based on evidence.”
Sritex entered bankruptcy proceedings amid mounting debt. According to the company’s financial statement from the first half of last year, total liabilities stood at approximately $1.6 billion, with most of the debt stemming from loans and bonds.
Several South Korean banks were among Sritex’s creditors. Hana Bank’s Indonesian subsidiary extended loans totaling around $22 million, while Woori Bank’s Singapore branch lent approximately $20 million, and its Indonesian subsidiary provided an additional $5 million.
In March, Sritex shut down all its factories in Central Java and began implementing mass layoffs in three phases under the supervision of a court-appointed administrator. The layoffs included approximately 8,500 workers at the company’s largest facility in Sukoharjo, with more than 10,000 jobs affected overall.
As Indonesian investigators continue to examine the legality of the loans, attention is turning to how these developments may impact the Korean lenders involved.
