E&Y named to fix BNI's internal controls<\/p>\n
The Jakarta Post, Jakarta<\/p>\n
State-owned Bank Negara Indonesia (BNI), under intense public
\nscrutiny following a recent high-profile lending scam, has named
\ninternational consultants Ernst & Young as an advisor to improve
\nits internal control mechanisms.<\/p>\n
BNI president Sigit Pramono told reporters on Friday that the
\nmove was part of the bank's efforts to improve risk management,
\nwhich is crucial to help avoiding the reoccurrence of financial
\nfraud in the country's second largest bank in terms of assets.<\/p>\n
\"If BNI's internal control system or procedures are in
\ntrouble, and are not in line with international standards, we'll
\nask Ernst and Young to make recommendations as to what we should
\ndo to improve them,\" Sigit said.<\/p>\n
The publicly-listed bank has been under fire following the
\ndisclosure of a Rp 1.7 trillion (about US$200 million) lending
\nscam, which centers on the improper disbursement of export loan
\nfacilities by one of the bank's South Jakarta branches to a
\nnumber of companies backed up with fictitious export documents.<\/p>\n
The fact that the scandal had been going on for around a year
\nbefore it was eventually detected in September confirmed poor
\ninternal control mechanisms on the part of BNI.<\/p>\n
Financially, the bank admitted that it could lose half of its
\nestimated profit of some Rp 3 trillion this year because of the
\nscam. It has revised this year's profit downwards to a range of
\nbetween Rp 800 billion and Rp 1 trillion.<\/p>\n
More importantly however, the case had impacted negatively on
\nthe bank's image in the eyes of investors, something that is
\nparticularly worrying as BNI has been slated for sale in the
\ncoming months.<\/p>\n
Sigit's announcement may be seen as part of an effort to try
\nto repair the bank's shattered image.<\/p>\n
The shareholders of BNI earlier this week dismissed seven of
\nthe bank's nine-member board of directors. Sigit, who was
\npreviously the president of Bank Internasional Indonesia, was
\nnamed the new president of the bank.<\/p>\n
Sigit has said that his immediate priority is to boost the
\nbank's internal supervisory system.<\/p>\n
The BNI lending scam, however, does not only highlight the
\nbank's internal control weaknesses, but also underscores the
\nweakness of Bank Indonesia's banking supervision mechanisms, one
\nof the main factors which led to the country's late 1990s
\nfinancial crisis.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/ey-named-to-fix-bnis-internal-controls-1447893297",
"image": ""
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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