Banking on the future


Mochtar Riady, a banker without a bank, is looking to China.

What is the biggest regret of a man who started with virtually nothing and is now worth US$4 billion? If he is Mochtar Riady, it could be that, after a lifetime in banking, he is likely to end his life without a major bank to his name.

Riady, born Li Wen Jin, turns 79 in May this year.  He is the founder of the sprawling Lippo group. He has been many things in his long and varied life. But he is first and foremost a banker. Not just any banker. Many consider him the best banker of his generation in South-east Asia.

In the six decades since independence, Indonesia has produced scores of wealthy Chinese.  Most come from the same mould: rough and tumble men who worked their way from poverty to undreamed riches via instinct, good timing and patronage. Many cannot speak Bahasa Indonesia, the national language, fluently. Few manage to converse in English. Wealthy they may be, but they are fish out of water the moment they leave Indonesia.

Not so for Riady. Rare among the first generation tycoons, he possesses a university degree, awarded by a venerable institution in the ancient Chinese city of Nanjing. He is comfortable in English, a skill he acquired early in his banking career. This gave him the confidence to venture into America where he bought over two banks. It also enabled him, in the early 1980s, to gain the trust of, and became a mentor to, a young and ambitious politician in the dirt-poor state of Arkansas who wanted to be President. The man was Bill Clinton.

Riady has always been fascinated by banks. To the Chinese, banks hold a special mystique. It confers a status not matched by other businesses. It also provides a ready pool of cash that the owner can use to finance his private businesses. Many Chinese businessmen have their own banks. More often than not, the banks end up insolvent as a result of the owners’ indiscriminate use of depositors’ money.

Riady’s story is different. His banking career which spanned four decades, can be divided into two parts. The first part was a shining success. The second part brought him multiple failures. Today, Lippo is a huge property and retail conglomerate that has businesses in Indonesia, Singapore, Hong Kong and China. But none of the half dozen banks Riady had run remains in the group. Riady is a banker without a bank.

Riady ventured into banking soon after he returned from China. After a few years of working for others, he led a group of investors to take over a small local bank in 1960. Four years later he moved to Bank Buana. In 1970 he bought the ailing Panin Bank with the help of two relatives, said to be his brothers-in-law. He turned around each bank he ran, though not without human cost. In Panin Bank, for example, it was said that Riady and his relatives quarrelled so badly, that when an offer came to run the Bank of Central Asia, Riady took it with alacrity.

BCA was tiny when Riady came on board. But it had an unrivalled advantage. It has then President Suharto as an indirect shareholder, his stake held through his children and his chief moneyman, Liem Sioe Liong, also called Sudono Salim.

In a decade, Riady transformed BCA into Indonesia’s biggest and most successful private bank, though many queried the term “private”, given the amount of government and semi-government business that was funnelled through the bank under the Suharto umbrella.

In BCA, Riady was the chief executive, but also the employee. His share was smaller than that of Liem and the Suharto children. The ambitious Riady found the situation untenable. In the early 1980s, he sold out of BCA and took his money to the US, the first Indonesian to do so.

Riady believes in connections. His chance friendship with Jackson Stephens, introduced to him by Bert Lance, the corrupt friend of President Jimmy Carter, brought him to Arkansas, where the Stephens group was de facto king. In Arkansas, the Lippo and Stephens groups jointly bought the Worthen Bank, and through it, financed the campaign if Bill Clinton. Meanwhile, he also bought a small Chinese-owned bank in San Francisco which he eventually renamed Lippo Bank.

The 1980s and 1990s were a good time for Riady and Lippo. Clinton, against all odds, became president. Riady was invited to his inauguration. He and his son James were frequent visitors to the White House, and  a key Lippo official ended up working in the Clinton administration.

What marred the picture was the near-collapse of the Worthen Bank, which regulators discovered was partly due to the Riadys funnelling the bank money to their private enterprises. Worthen was rescued from insolvency by Jackson Stephens, whose friendship with Riady was strained by the incident.

Riady moved his son James from Arkansas to San Francisco to run the Lippo Bank. But history repeated itself, and the bank received multiple stern warnings from the regulators. By then, in the mid-1990s, questions of Riady’s involvement in Clinton’s campaign fundraising caught the attention of the Republican senate. After some time, James Riady sold the Lippo Bank and returned to Indonesia.

Questions are still asked today as to how a man as astute as Riady could have so many failures in his hands. In the mid-1990s, his Lippo Bank in Indonesia missed an interbank interest payment and triggered a run. It was only through the Suharto connection that Lippo was rescued by a group of private companies. It is now owned by Malaysian interests. Around that period, Riady sold his bank in Hong Kong to his partner in China. Lippo had left banking.

One answer is that while Riady is keen on banks, he is also keen on property. A huge chunk of Lippo’s money had been spent on property projects, such as the highly luxurious Lippo Village just outside Jakarta. It is now clear that Riady is ahead of his time. Lippo Village is popular today, but not when Riady first marketed it. His bank problems were mostly related to cash flow issues tied to his property projects.

Today, after weathering various down cycles, Lippo is on the way up. Riding on the Asian boom, all the property projects that have given Riady trouble are now, at least on paper, profitable. The family, which at one point looked terribly vulnerable, is said to be worth US$ 4 billion


Semi-retired and now living in Lippo Village, Riady is still exercising his formidable financial skill. This time he is not acting through a bank, but via financial instruments called Real Estate Investment Trusts or Reits. Having built up a huge portfolio of properties in Indonesia, Riady is now taking steps to turn properties into cash, which gives his children the freedom to leave the country if they wish. If he has his way, his grandchildren may one day be holding passports issued by China, where he was born and where Lippo is now aggressively investing. 


Related Stories:

The Riady family - Absent friends

James Riady - The evangelical felon

Stephen Riady - Agent of God or the other way around?


First Published: 
February 2008

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lee han shihLee Han Shih is the founder, publisher and editor of asia! Magazine.

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