BPK refuses to join team to resolve loans<\/p>\n
JAKARTA (JP): Head of the Supreme Audit Agency (BPK) Satrio B.
\nJudono said Friday that the agency would not participate in a
\njoint team to be formed by the Ministry of Finance and Bank
\nIndonesia to seek a \"political resolution\" over the controversial
\ngovernment bank liquidity support facility.<\/p>\n
\"We won't join the team. We prefer to be in the middle,\" he
\ntold reporters.<\/p>\n
The House of Representatives commission IX on state budget and
\nbanking in a recent meeting with the Ministry of Finance and Bank
\nIndonesia has recommended the forming of the joint team.<\/p>\n
The recommendation was made after Bank Indonesia and the
\nMinistry of Finance continued to be embroiled in a dispute over
\nwho should be held responsible for the massive misuse of the
\nliquidity support loan.<\/p>\n
Both government and central bank officials admitted that the
\ncase had taken a great deal of their energy and time.<\/p>\n
In a limited cabinet meeting on Sept. 3, 1997, two months
\nafter the financial crisis hit the country, the government
\ndecided to inject liquidity support loans via Bank Indonesia to
\nbanks suffering from massive runs.<\/p>\n
The measure was needed to prevent the country's banking system
\nfrom systematically collapsing.<\/p>\n
According to a recent BPK investigative audit report, the
\ngovernment had injected around Rp 144.5 trillion in emergency
\nloans to troubled banks, but some Rp 138 trillion of the loans
\nhad been abused.<\/p>\n
The loan was only supposed to be injected to banks suffering
\nfrom massive runs and to be used to repay depositors money, but
\nBPK said that some banks had instead used the loan for currency
\nspeculation and to finance their affiliated businesses.<\/p>\n
BPK said that the abuse occurred partly due to the weak
\nsupervision of the central bank.<\/p>\n
The government has until now declined to be fully responsible
\nfor the Rp 144.5 trillion loan because part of the loan was
\nchanneled due to the \"mistakes\" of Bank Indonesia.<\/p>\n
The Ministry of Finance is supposed to issue bonds to the
\ncentral bank equal to the amount of the liquidity support loan
\nwhich had been disbursed by Bank Indonesia.<\/p>\n
Bank Indonesia in turn has threatened to withdraw all the
\nbanks' assets it had transferred to the Indonesian Bank
\nRestructuring Agency (IBRA) if the finance ministry refused to
\nreimburse the liquidity support.<\/p>\n
The threat has made the issue even murkier because IBRA has
\nsold several of the assets as part of its asset recovery program.<\/p>\n
Bank Indonesia declines any wrongdoing, arguing that it
\ninjected the liquidity support to the banks based on the
\ngovernment policy directive of September 1997. The central bank
\nat the time was still part of the government but is now an
\nindependent institution under a new law enacted in May, 1999.<\/p>\n
Forcing Bank Indonesia to be responsible for the misuse in the
\nliquidity support loan would render the central bank bankrupt or
\nrequire it to seek massive recapitalization.<\/p>\n
Satrio agreed that the government should be responsible for
\nthe liquidity support injected by the central bank since Sept. 3,
\n1997 because it was a cabinet decision, but he also insisted that
\nthe process of the loan disbursement must be thoroughly checked
\nto ensure that Bank Indonesia channeled the money to the right
\nbanks.<\/p>\n
Satrio said that there had been suspicion that Bank Indonesia
\nhad also channeled the loans to banks which were not suffering
\nfrom a bank run, which was against the criteria set by the
\ngovernment in the September 1997 meeting.(rei)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/bpk-refuses-to-join-team-to-resolve-loans-1447893297",
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