Appointment of Mantegazza as supplier of protecting ribbon for Bank Indonesia new banknotes incited strong protest from previous suppliers. The new banknotes of Rp 100.000 and Rp 20.000 applied more sophisticated protecting ribbons.

A dozen overseas companies for banknotes supply had for the last month presented their range of capabilities at the office of Bank Indonesia. Like beautiful and sexy model walking up the cat walk the contestants displayed their expertise in front of the juries. They competed to win the tender for the supply of papers as material for producing new banknotes of Rp 100.000 and Rp 20.000 scheduled for distribution in April next year.

Next week, participants that passed the prequalification test in presenting samples of their products will participate in the test of money printing at State RI Money Printing Company (Perum Peruri). The test is expected to prove whether the printed paper complied with the requirement or not. Afterwards, evaluation is made who offered the lowest price and to be followed with announcement of winner in the coming September. Bank Indonesia (BI), however, is still silent regarding the quantity of banknote to produce the two new banknotes.

The 12 contestants earnestly involved in the selection are Crane AB (United States), Louisenthal (Germany), Portals (England), Cartiere M. Fabrianto (Italy), VHP (Dutch). Groznak (Russia), Hyosung (Korea), Moneda (Spain), Bank de Franc (France), Davlat Belgisi (Uzbekistan), Radece Papir (Slovenia), and Landqart (Swiss).

New banknotes to be distributed certainly differed from the previous ones. The Rp 100.000 banknote, for instance, will no longer use polymer material. The material this time will use paper, also with various extra sharp colours. The two Indonesian figures, Soekarno-Hatta that proclaimed the Indonesian independence remained.

It is Rp 20.000 banknote that had drastically changed. It is dominated by green colour. The banknote presents the local hero of Bandung, Otto Iskandardinata. At present, BI and Perum Peruri are completing the final design of the new banknotes. "But it will look like this more or less," said Difi Ahmad Djohansyah, Head Department of Money Procurement Directorate of BI Money Distribution while displaying two samples of the new banknotes to Rini Sulistyowati of GATRA.

According to Difi, all these times BI specifies tender of the banknotes along with the protecting ribbon. At least, 11 companies had already supplied demand for BI paper money, namely Crane AB, Portals, Louisenthal, Arjo Wiggins, VHP, Tumba Bruk, Cartiere M. Fabriano, Fabrica de Moneda, Hyosung, and Goznak.

The only local supply company was PT Pura Barutama, a manufacturer from Kudus, Central Java. Pura sold banknote paper for Rp 100, Rp 1.000, and Rp 5.000. However, the company’s participation on the contrary created some commotion, and prompted protracting dispute that involved BI and Peruri. The State Enterprise that prints money thinks the paper supplied by Pura is below standard which means not worth printing. Pura strongly objected. Both brought their case to the court and the trial is still being carried out.

In the case of the plan for emission of the new banknotes of Rp 100.000 and Rp 20.000, BI separates the procurement of protecting ribbon with the banknote paper. Basically, BI wants to have the lowest bid and refused to being further dictated by major money manufacturers in the world such as Crane, Portals, and Louisenthal.

The procurement of protecting ribbon and banknote paper as a unit would only benefited limited number of companies that qualified. "We would like to offer equal opportunity for other suppliers," said Difi. The separate procurement is also for the purpose of obtaining better protecting ribbon in order to prevent forgery.

The new model introduced by BI, however, provoked some suspicions. A number of routine suppliers of banknote paper to BI suspected that "there’s something fishy" going on in the BI manoeuvre. Furthermore, after further investigation, they found that the procurement of the protecting thread was not carried out through an open tender.

Demand of Banknote Paper at BI

Source: Bank Indonesia

They have every reason to feel worry for Indonesia is one of their most lucrative business customers for Indonesia is importer of banknote paper second only to India in the world. This year, the requirement for banknote paper reached up to 160,14 million reams lower than the previous year of 351,96 reams, the highest figure since 1995 (see table: Requirement for Money Paper</I>).

Several companies sent their protest to BI. The letter that strongly objected was sent by Crane AB, a giant banknote paper manufacturer headquartered in Massachusetts, the United States. Crane has also its factory in Sweden, after their acquisition of AB Tumba Bruk, a manufacturer of banknote paper, securities, and coins from Sweden established in 1755. In the letter of May 19 recently sent to Governor of BI Burhanuddin Abdullah, Crane warned that he represented big organization which, among other things, supplied banknote paper for Bank Central of Europe.

Crane also pointed out that his company has for more than a century supplied the banknote paper for the printing of US dollar. Crane also added that he has already a customer of BI for many years. Bill Westervelt, the Managing Director of Crane AB who wrote the letter, also praised the way BI in announcing tender for the procurement of bank note paper openly and fairly. Perhaps the praise was launched because Crane supplied about 60% of BI total need for banknote papers.

Unfortunately, Bill added, BI is presently taking different measure. With the requirement of the protecting ribbon, BI tends to be closed. It even gives monopoly to an Italian company, Mantegazza Antonio Arti Grafiche. Bill admits he was worried for the unusual step taken by BI. This would leave no chance for other suppliers to offer competitive price. What makes it more difficult was that this order applies for five-year period.

Crane warns that the negative impact of giving monopoly silently prepared would be hazardous. For example, the high risk of banknote printing quality. Moreover, according to Bill, Mategazza is not fully tested yet. "The procurement of protecting ribbon not through tender will cause BI to pay a very dear price," he said. Bill thinks that the appointment of Mantegazza whithout going through tender process will besmirch the reputation of BI in upholding transparency. Therefore, he requested that BI should conduct an investigation regarding the process in the procurement of the protecting ribbon.

A number of BI officials met by GATRA acknowledged receipt of the letter. "The letter indicated the arrogance of Crane. Just because he represents a major US company he feels he has the right to dictate us," said an executive of the central bank in an angry tone.

Objection also came from Securency Pty, Ltd, from Craigieburn, Victoria, Australia, the only company who supplied plastics for Rp 100.000 banknote. In the event that the money will be produced from paper material, the company will lose the business. Security for the first time produced polymer in 1998. The product is already applied in 23 counties such as China, Singapore, Taiwan, Thailand, and Indonesia.

The most startling, because of the closed procurement of the protecting ribbon, BI was attacked by a faked e-mail sent on January 13. The letter was on behalf of Antonio Mantegazza, the boss of Mantegazza. The e-mail titled "Bank Indonesia Project", was addressed to Fillip Wardana, where Antonio expressed his appreciation for the hard work by Wardana in obtaining the order. Wardana is the boss of PT Konexindo Abadi, Jakarta, Mantegazza representative in Indonesia.

Antonio informed that the agreed price already included 45% commission for senior BI officials. At first the company was really surprised for the enormous jacking up of price. "But this is the kind of business in Indonesia," he wrote.

Wardana was very surprised to receive the letter. Other BI officials who also received copy of the e-mail were also as surprised. They countered by holding a meeting at BI, on March 18. The meeting was attended by BI officials of banknote procurement and Mantegazza was represented by Antonio Montegazza, Maurizio, Gianni Santoro and Filip Wardana himself.

The meeting reached a conclusion that the e-mail was a fake. Afterwards, they made an announcement which content denying Mantegazza had promised certain commission to senior BI officials because of the appointment as supplier. What really annoyed the senior BI officials was as if the e-mail already determined the agreed price by BI. "Whereas, we have only agreed the price of Mantegazza in earlier May," Difi told GATRA.

Difi has reason to appoint Mantegazza. Last August, the central bank was preparing for the publication of two new banknotes. Later Mantegazza proposed only for the supply of the protecting ribbon. "We previously didn’t know this company," he said.

What really startled BI was that they found out that Mantegazza’s protecting ribbon was also used by the European Central Bank (ECB) in producing material for their currency, euro. This means that the company is not an insignificant company. Therefore, BI sent a team consisting of four persons, two from BI and two from Peruri.

For seven months, from September to last March, the team repeatedly returned to Italy to consolidate for the design of the protecting ribbon. The new ribbon has specific design and certain codes estimated very difficult to forge. "The result was excellent. This time the technology of the protecting ribbon we will use is the most developed," he said.

All these times, BI banknotes used protecting ribbon placed inside the paper. In order to know whether it is genuine or faked, the banknote is spotlighted in the background. The material for the ribbon was at the same time prepared by the banknote manufacturer. This time the new banknotes of Rp 100.000 and Rp 20.000 with the ribbon will look very clear. Where the previous size of the ribbon was 1,5 mm, for Rp 100.000 this time is 3,5 millimetres, and for the Rp 20.000 is 3 millimetres. Difi added, a ream of the banknote paper will need 1,826 kilometres of protecting ribbons.

Difi rejected the accusation that the price in the purchase of the protecting ribbon from Mantegazza was more expensive. Moreover, there are special elements that can’t be made for comparison because this related to its highest degree of confidentiality. For the Rp 100.000 banknote, the price of the protecting ribbon is 30 euros (about Rp 288.000) per kilometre, while for Rp 20.000 banknotes is about 15 euros (about Rp 144.000). "The price is already compared with other protecting ribbon from other manufacturers," he said. He guaranteed that this price from Mantegazza can be accountable.

A Family-run Company

Mantegazza Antonio Arti Grafiche was established in 1921, a private company where the whole shares are owned by the family of Mantegazza. Owner of famous protecting ribbon in Europe is headquartered in Bolate, Milan, Italy.

Since 1970’s, Mantegazza has developed their capability by using magnetic ink technology in various applications. The company also produced the first magnetic cards in Europe. In 1995, Mantegazza received order for protecting ribbon for banknotes in Italy and Spain. Later, in 1998, the company was entrusted by European Central Bank (ECB) to supply euro banknotes.

At present, Mantegazza introduced three products: plastic cards, securities, and protecting ribbon. Mantegazza is the producer of debt or credit cards in Europe used by Visa, Europay, and MasterCard.

The new manoeuvre by BI in separating the protecting ribbon with the banknote paper certainly worried those suppliers that can’t meet the qualification. The question now is whether it was because of being disqualified or because of other reasons within the central bank that the issue has spotlighted the banknote procurement at BI.

Saiful Anam