📚 Acrostics Anatomy: Sritex’s Scavenger Hunt
The Indonesian textile company’s creditors face diminishing recovery.
💼 Brief Take: Sritex’s Depleted Political Capital (24 May 2025)
📒 Quick Take: Sritex’s Unintended Twist (2 June 2025)
📒 Quick Take: Sritex Family Gets Desperate (18 June 2025)
💼 Brief Take: Sritex’s Car Raid (9 July 2025)
💼 Brief Take: Sritex’s Depleted Political Capital
24 May 2025
The detention of Sritex’s boss and the comment from Indonesian politicians show that the Lukminto family’s political capital has waned.
Sritex’s latest development is being closely watched by other Indonesian families.
Indonesia’s State Secretariat Minister Prasetyo Hadi said the Attorney-General’s Office (AGO) should take action against Sri Rejeki Isman (Sritex)’s boss, Iwan Setiawan Lukminto, if there’s strong evidence of corruption, CNBC Indonesia reported.
Former President Joko Widodo – known as Jokowi – also said the AGO’s move to detain Iwan must have been based on evidence and everyone should follow the legal process.
Eveline’s Take:
👕 The comment from Jokowi and the official in current president Prabowo Subianto’s administration indicated that the Lukminto family’s political capital has waned. This is a big deal because the late founder of Sritex Group, Haji Muhammad Lukminto (an ethnic Chinese who embraced Islam), supported successive Indonesian presidents and built an extensive network. The family also reportedly had a long-standing relationship with Jokowi, who hailed from the Central Java city of Solo.
👕 The Lukmintos’ local connections were often cited as one of the factors that attracted offshore lenders. When a foreign investor visited Sritex’s base in Solo, the founder’s eldest son, Iwan, offered a security entourage to accompany the investor back to the airport, impressing the buyside community, according to a bondholder friend.
👕 Sritex’s game had long been to borrow more to repay old debt, but the musical chairs stopped when some banks pulled out of the textile sector. The family fought tooth and nail to keep Sritex as a going concern, but the company was shut down on 1 March 2025 after it went bankrupt.
👕 This week, AGO investigators confiscated several items from the Lukmintos’ palatial house in Solo, before detaining Iwan over a suspected sidestreaming. These loans were intended for working capital, but Iwan – Sritex’s president commissioner who was previously its president director – allegedly used the money to repay debt and buy plots of land.
👕 Apart from Iwan, the AGO also detained former executives of Bank DKI and Bank BJB, which are both owned by local governments. The AGO reportedly doesn’t rule out calling in other members of the Lukminto family to assist in its investigation. Iwan’s younger brother who shared the same first name, Iwan Kurniawan Lukminto (known as Wawan), last held the role of Sritex’s president director.
👕 A friend in the banking circle said that Sritex’s latest development is closely watched by Indonesian families who are making a “rapid move” to reallocate their wealth to safer places. As I previously wrote, capital started flowing out of the country since late 2024 partly because some rich Indonesians feared being ensnared in tax or legal cases.
📒 Quick Take: Sritex’s Unintended Twist
2 June 2025
Indonesia’s investigation into suspected corruption at bankrupt textile company Sritex has ensnared more state-owned bankers.
Some private lenders may reconsider participating in a syndication involving state-owned banks for fear of being dragged if the loan sours.
Indonesia’s investigation into suspected corruption at bankrupt textile company Sri Rejeki Isman (Sritex) has ensnared more state-owned bankers.
The Attorney-General’s Office (AGO) detained Sritex’s boss Iwan Setiawan Lukminto on 20 May 2025, along with two former executives of Bank DKI and Bank BJB, which are owned by local governments.
Since then, the AGO has also called two former officials of state-owned lender Bank Rakyat Indonesia (BRI) and the CEO of Bank Sumut, a development bank for the North Sumatra province, to assist in its probe.
A member of a parliamentary commission overseeing law, human rights and security (Komisi III), Nasir Djamil, reportedly urged the AGO to pursue the case “to the roots”, as the alleged sidestreaming of loans given to Sritex had caused losses to the masses. Sritex shut down on 1 March and laid off nearly 11,000 workers, contributing to the nation’s jobless numbers.
The AGO’s move flew against the common perception in Indonesia that a restructuring deal absolves the sins of the debtor by effectively wiping the slate clean (check out Justin Alexander Halim’s post here).
Sritex’s local in-court restructuring (PKPU) agreement was ratified in January 2022 despite protests from some creditors, but this deal was eventually nullified when a supplier pushed the company into bankruptcy last year.
It’s a positive turn of events if Indonesian officials are serious about demanding accountability. In early 2021, Sritex attempted to sell new bonds partly to refinance its short-term loans, but failed because investors had turned more cautious after being burned by another Indonesian textile group, Duniatex, which didn’t even pay its first coupon.
High-yield refinancings are often a game of “pass the bomb” where lenders throw the credit to someone else before it blows up, but the question is whether it’s still a fair game if the information disparity between the players is too big. How many banks knew that Sritex was close to imploding and tried to dump the hot potato on bondholders?
Nevertheless, the AGO’s entry into the picture via the state-owned banks has brought a side effect, as the pool of assets under liquidation may shrink if some of them are seized by the officials. In short, the estimated recovery for Sritex’s private lenders could be even lower if their collateral is confiscated by the AGO to recoup state losses.
While it’s neither practical nor sensible for a bookrunner to bar state-owned banks from joining a loan syndication, some private lenders may reconsider participating for fear of being dragged into any AGO investigation if the loan sours. If this happens, it would be an unintended consequence of the latest twist in the Sritex saga.
📒 Quick Take: Sritex Family Gets Desperate
18 June 2025
The younger son of Sritex’s late founder, Iwan Kurniawan Lukminto, attempted to distance himself from the alleged sidestreaming of loans.
Indonesia’s AGO has boldly expanded its probe while updating the public on each step taken by the investigators.
Desperate times call for desperate measures.
After being summoned by the Attorney-General’s Office (AGO) for the third time, the younger son of Sri Rejeki Isman (Sritex)’s founder – Iwan Kurniawan Lukminto – was asked by reporters to comment about the alleged misuse of loans.
As the vice president director at the time, Iwan Kurniawan only knew that the loans obtained by the Indonesian textile company were used for business development and working capital, his lawyer Calvin Wijaya said. (Watch the video here).
“Everything was in line with the intended purpose,” Wijaya told reporters on Wednesday (18 June 2025), while his client mostly nodded and smiled.
Wijaya’s colleague then claimed that “the banks were the one that approached our client” based on their own financial analysis. “We’ve conveyed all that to the investigators so everything’s clear,” Wijaya added.
When asked about his older brother and former Sritex president director – Iwan Setiawan – who was named a suspect by the AGO, Iwan Kurniawan briefly opened his mouth only for his lawyer to interject: “That’s the prerogative of the investigators. If the legal foundation is sufficient, then the investigators can draw their conclusion and detain Pak Iwan Setiawan.”
I’ve already documented Sritex’s financial irregularities, including its off-balance-sheet debt, less than integrated business model, as well as abnormally high margins and “work in process” inventories, so I don’t think it’s even worth commenting on the lawyers’ claim that banks were tripping over themselves to lend to Sritex.
What I find more interesting is Iwan Kurniawan’s attempt to distance himself from the alleged sidestreaming of loans.
The AGO has imposed a travel ban on Iwan Kurniawan and called him for questionings, but his brother – Iwan Setiawan – was already detained alongside two former executives at Bank BJB and Bank DKI, which are owned by local governments. In short, Iwan Setiawan seems to be in a bigger pickle than his sibling.
However, both brothers are still united in their attempt to protect their personal assets. The two Iwans have sued the court-appointed administrators to separate 152 of their personal assets from Sritex’s bankruptcy estate that will be liquidated to squeeze out some recovery for creditors. As a proposed replacement, they reportedly offered 103 “sponsor assets” spread over the Central Java regency of Sukoharjo.
The second noteworthy development is the bold expansion of the AGO’s probe, along with public updates on each step taken by the investigators.
Under the “Hot Issue” on an impressive multimedia site, the AGO’s information centre reported that they have called more witnesses, including from state-owned banks BNI and LPEI (Indonesia Eximbank), for the Sritex case.
The AGO also flexed its muscles this week by displaying stacks of cash that it “seized” from Asian palm oil giant Wilmar Group amid a probe into alleged corruption in the issuance of export permits.
Wilmar said five of its subsidiaries handed IDR 11.88 trillion (USD 729 million) in “security deposit”, pending the Supreme Court’s ruling on the appeal filed by the AGO against a lower court’s acquittal of these companies. The Wilmar units took all actions “in good faith and free from any corrupt intent,” according to the group’s statement.
Perhaps it’s as what my lawyer friend said:
“The AGO has been active in its prosecution of high-profile cases, even more so than other law enforcement agencies in Indonesia. Amidst all of the developments occurring in this space, President Prabowo has recently enacted Presidential Regulation No.66 Year 2025 on the State Protection of Prosecutors affording military protection by the Indonesian Armed Forces for public prosecutors in carrying out their duties.”
What this means for the Lukmintos is that the AGO has a newfound immunity and is likely keen to hold Sritex as an example for other Indonesian families on what not to do.
💼 Brief Take: Sritex’s Car Raid
9 July 2025
Indonesia’s Attorney-General’s Office (AGO) has confiscated 72 vehicles, including luxury cars and an ambulance, as part of its investigation into alleged corruption.
Sritex’s court-appointed administrators clashed with the AGO as the confiscated assets should have been included in the liquidation pool for creditors.
Indonesia’s Attorney-General’s Office (AGO) has confiscated 72 cars as part of its investigation into Sri Rejeki Isman (Sritex)’s alleged corruption.
The vehicles that were seized on 7 July 2025 include luxury cars and even an ambulance, Kompas reported, adding that army officers were seen at the bankrupt textile company’s premises in the Central Java regency of Sukoharjo.
Eveline’s Take:
🚗 At least two soldiers were pictured on site, carrying rifles while monitoring the seizure of Sritex’s cars. The AGO seems to be sending the signal that its investigators are protected by the Indonesian army under a regulation that was enacted by President Prabowo Subianto in May 2025.
🚓 Sritex’s court-appointed administrators reportedly had a debate with the AGO as the confiscated assets should have been included in the bankruptcy estate that will be liquidated, but the investigators countered that the cars were connected to the suspected corruption. In short, the AGO is likely of the view that Sritex’s borrowings were partly sidestreamed to buy those cars.
🚑 A labour union official representing Sritex’s workers urged the AGO “not to snatch” the assets that were already placed in the bankruptcy estate. These assets were initially set to be auctioned starting this month, with the proceeds distributed to Sritex’s creditors including its unpaid workers, Antara reported, citing the official.
🚙 The cars were also among Sritex’s best assets because they can be sold more easily than factories and machines, which will require another textile company to operate them. As I wrote in March, any potential investor would want to be ringfenced from Sritex’s liabilities by leasing the assets instead of buying them outright.
🛻 I flagged last month that Sritex’s creditors may face an even lower recovery due to the shrinking pool for liquidation, and this has proven true with the AGO’s latest asset grab. The AGO has shown the ability and willingness to step in when a soured loan allegedly caused state losses, raising questions over the potential impact on private lenders in Indonesia.