Citibank will no longer rely on outsourcers to conduct its debt-collection business in Jakarta, Indonesia.

It was reported today in the Wall Street Journal that Citibank has hired in excess of 1,400 employees in Indonesia to staff its debt-collection operations.

This is an apparent reaction to the much-publicized death of a small Indonesian political party leader, Irzen Octa, 50, who is said to have died under suspicious circumstances in a Jakarta Citibank office on March 29 after a meeting in that office with outside credit card debt collectors hired by the bank, as reported by The Jakarta Globe.  

Addressing the move by Citibank to bring its Indonesian debt-collection activities in-house, Citibank country manager Shariq Mukhtar is quoted as saying in a press release, "This is beneficial for all parties and strengthens controls and management in this area."

Following the incident, Indonesian lawmakers asked Bank Indonesia, the central bank, to revise regulations on debt-collection practices, and the police to probe if there was criminal behavior at the bank’s local unit, Bloomberg (News - Alert) reported. Citibank’s debt collection practices were questioned by Bank Indonesia after the death and police are said to still be investigating the circumstances around the death. Bloomberg reported that Gatot Eddy Pramono, head of the South Jakarta Police District, said on April 6 that four people are suspected of being involved in the death.

According to today’s Wall Street Journal report, Bank Indonesia is “considering penalties against Citibank for breaching local rules on debt collection.”

Earlier the central bank put a ban on Citigroup to stop recruiting customers for its Citigold service during the investigation, it was reported in Wall Street Journal blog late last week.

In the meantime, Citigroup Inc.’s consumer banking unit was sued by the dead man’s wife for the equivalent of $347 million for what the lawsuit says was physical abuse when Irzen Octa met with the bank’s debt collectors, disputing the amount he owed on his credit card, according to the Bloomberg report.