Bank Bali scandal serves as a lesson for the government<\/p>\n
By Aleksius Jemadu<\/p>\n
BANDUNG (JP): What is the difference between Arnold A.
\nBaramuli, the current head of the Supreme Advisory Council (DPA),
\nand businessman Eddy Tanzil?<\/p>\n
When the latter was accused of misusing trillions of rupiah of
\npublic money, he was jailed but then fled the country. When
\nBaramuli was accused of being involved in essentially the same
\nlegal case by members of the legislature, he confidently raised
\nhis head in front of television cameras as if he wanted to
\ndeclare: "Baramuli can do no wrong". If true, then it is good
\nnews. If not, it will be a national disaster.<\/p>\n
The contentious issue in the Bank Bali scandal is the transfer
\nof Rp 546 billion to politically well-connected PT Era Giat Prima
\n(EGP) as a commission fee for helping the bank recoup interbank
\nloans from a closed institution.<\/p>\n
Since all loans are guaranteed by the Indonesian Bank
\nRestructuring Agency (IBRA), Bank Bali should not have had to use
\nthe service of a third party.<\/p>\n
An investigation conducted by the House of Representatives
\nspecial team indicated that Baramuli was involved in the scandal.
\nHe is suspected to have had an active role in pushing through the
\nBank Bali\/EGP transaction. This allegation is based on the
\ntestimonies of various parties, including former Bank Bali
\npresident Rudy Ramli, Minister of Finance Bambang Subianto and
\nIBRA chairman Glenn Yusuf.<\/p>\n
Many people have also wondered why Bank Indonesia did not
\nallow PricewaterhouseCoopers (PwC) to audit all the bank accounts
\nrelated to the scandal. Moreover, PwC was not allowed to disclose
\nthe complete version of its audit to the House commission on the
\ngrounds that it would violate banking secrecy codes and its
\ncontract with the Supreme Audit Agency (BPK). People now wonder
\nif there is a high level conspiracy to mask this scandal.<\/p>\n
Whether or not there is a conspiracy, it is an undeniable fact
\nthat bank restructuring is at the heart of an economic recovery
\nin Indonesia. Too much financial liberalization in the past was
\nbelieved to be behind the collapse of the Indonesian banking
\nindustry.<\/p>\n
However, the implementation of bank restructuring under the
\ncoordination of IBRA cannot be perceived as merely a mechanical
\ntranslation of goals into routine procedures.<\/p>\n
We need to take into account fundamental questions about
\nconflicts of interest, decision-making deviations and the
\ndistributions of costs and benefits among major policy
\nstakeholders. For instance, to what extent have the officials of
\nIBRA done their job in a professional and accountable
\nmanner? Are they politically neutral? Can they resist outside
\npressure imposed by ambitious politicians within the incumbent
\ngovernment?<\/p>\n
There are some important lessons the Indonesian government
\nshould learn from the Bank Bali scandal. First, the restructuring
\nof the Indonesian banking industry involves the management of a
\nhuge amount of assets taken over by the state from troubled
\nbanks. Those who are entrusted with this job should be free from
\noutside political pressure and have a strong sense of public
\nresponsibility.<\/p>\n
Second, the success of the International Monetary Fund's (IMF)
\ncure in solving the economic crisis is not only determined by a
\ncompletion of the scheduled lending commitment but also by the
\nprofessionalism and sense of public accountability of Indonesian
\ngovernment officials.<\/p>\n
Third, we cannot rule out the possibility of a cover-up in the
\nscandal in order to protect some high government officials. There
\nis a strong indication of the manipulation of public ignorance of
\nthe complexity of banking business. Therefore, on behalf of the
\nIndonesian public, the media should continue to pressurize those
\nwho were involved in the scandal until justice is done.<\/p>\n
Last but not least, it is high time for Indonesia to have a
\nstrict regulation to kick big money out of politics. Like the
\nUnited States, Indonesia does need a special law to regulate and
\nlimit campaign contributions so that a healthy competition among
\npolitical parties or presidential candidates can be expected.
\nMany government officials, including those who are allegedly
\ninvolved in the Bank Bali scandal, regard themselves as genuine
\nreformists. But what is the use of reform if the reformists today
\nwill be the liars of tomorrow?<\/p>\n
Aleksius Jemadu Ph.D. teaches international political economy
\nat the School of International Relations at the Parahyangan
\nCatholic University, Bandung.<\/p>",
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