Central bank fires back at state auditors<\/p>\n
JAKARTA (JP): Bank Indonesia fired back at the Supreme Audit
\nAgency (BPK) on Sunday after the latter claimed that
\nirregularities in the central bank's books prevented it from
\nforming any opinion regarding the health of the bank.<\/p>\n
BPK Chairman Satrio \"Billy\" Joedono and Minister of Finance
\nBambang Sudibyo visited the House of Representatives on Friday to
\npresent the agency's report of Bank Indonesia's financial
\nposition as of May 17, the date it legally became an agency
\nindependent of the government.<\/p>\n
Bank Indonesia had earlier asked BPK to delay the presentation
\nuntil after it had a chance to discuss it with the auditors, and
\nwarned that premature public disclosure could damage the
\nreputation of Indonesia's monetary system.<\/p>\n
Billy and Bambang also told reporters on Friday that Bank
\nIndonesia's equity had turned negative and that it needed to be
\nrecapitalized.<\/p>\n
The report also pointed out at \"weak internal controls\" of
\nBank Indonesia that led to the auditors' inability to fully carry
\nout the auditing process.<\/p>\n
Bank Indonesia Governor Sjahril Sabirin said on Sunday that
\nBPK was only required by law to audit the bank's balances at the
\nstart of the period when it became an independent agency.<\/p>\n
\"Bank Indonesia does not see any clause calling for an opinion
\nabout starting balances,\" it said in a statement.<\/p>\n
It accused state auditors for using different accounting
\nstandards from those followed by the central bank which had been
\napproved by the government and the International Monetary Fund.<\/p>\n
Sjahril, who called a media conference on Sunday, said that
\ngiven the sensitivity of the issue, he would have preferred to
\ndiscuss the matter with BPK behind closed doors. Since BPK made
\npublic its findings, the bank was obliged to respond, he said.<\/p>\n
Bank Indonesia said it would welcome the government's plan to
\nconduct an investigative audit on the emergency liquidity
\nsupports extended by the bank.<\/p>\n
One crucial point of debate between the bank and its auditors
\nis regarding the status of Rp 51.7 trillion of the liquidity
\ncredits that were extended to bail out many commercial banks
\nduring the economic crisis in 1997-98.<\/p>\n
The money was part of the Rp 164.5 trillion (US$23.5 billion)
\nin liquidity credits channeled by Bank Indonesia as part of the
\ngovernment's blanket guarantee on all banks.<\/p>\n
The Ministry of Finance claimed that Rp 51.7 trillion of these
\nloans did not meet the criteria under the blanket guarantee
\nagreement.<\/p>\n
Bank Indonesia agreed that the criteria were still in
\ndispute.<\/p>\n
Bank Indonesia Deputy Governor Aulia Pohan, speaking at the
\nsame media conference, warned that unless the government accepted
\nthe claims, 20 banks could collapse, according to detik.com.<\/p>\n
Aulia said the current government could not simply renege
\ncommitments made by the previous government of President B.J.
\nHabibie which issued the guidelines for the liquidity credits.<\/p>\n
In an apparent attempt to limit the damage caused by his
\nreport, Billy said on Friday that Bank Indonesia could still
\ncontinue its interbank clearing activities and would be able to
\nmeet its obligations despite its negative equity position.<\/p>\n
BPK conducted a general audit on Bank Indonesia's initial
\nreport per May 17 from Sept. 1 through Dec. 7, assisted by
\nindependent auditor Siddharta & Harsono\/KPMG.<\/p>\n
The agency tagged a \"disclaimer\" or \"no opinion\" label on its
\naudit of Bank Indonesia.<\/p>\n
\"The results of this audit, however, are not about the life
\nand death of Bank Indonesia. These results are about openness,
\nabout transparency,\" he said.<\/p>\n
He said the reason why the agency gave such a conclusion was
\nthe serious weaknesses in the central bank's internal control.
\nFor instance, Bank Indonesia did not have a complete and reliable
\nlist of fixed assets and inventory of assets.<\/p>\n
Other weaknesses in the bank's internal control included the
\nfact that Bank Indonesia did not have certificates of ownership
\nfor its gold assets deposited in overseas custodian banks.<\/p>\n
Bambang said the government was prepared to recapitalize to
\nfill the hole in the central bank's balance sheet. \"With approval
\nfrom the House, the government will recapitalize this negative
\nequity,\" he said.<\/p>\n
He said the government had secured the IMF's approval and it
\nwas now up to the House.<\/p>\n
Bambang also called on the House to assign BPK to follow up
\nthe audit results by conducting an investigative audit on BI.<\/p>\n
Based on the results of BPK's investigative audit, the
\ngovernment will assign the Attorney General's Office to take
\nlegal proceedings against those suspected of committing criminal
\nactions.<\/p>\n
He suggested that Bank Indonesia reevaluate, in one month's
\ntime, all its assets based on the current fair market value to
\ndetermine its equity. (06\/rid)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/central-bank-fires-back-at-state-auditors-1447893297",
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