House to summon IMF over bank program<\/p>\n
JAKARTA (JP): The House of Representatives plans to summon
\nInternational Monetary Fund officials for information about the
\ncontroversial multibillion dollar government bailout liquidity
\nsupport provided between late 1997 and 1998 to help ailing banks
\nstay afloat.<\/p>\n
Head of the House special investigation team Sukowalujo
\nMintohardjo said on Friday the House had yet to decide on a
\nschedule.<\/p>\n
\"The role of the IMF in the restructuring of banks in
\nIndonesia is huge, particularly in relation to the liquidity
\nsupport policy. We'll confirm this with them,\" Sukowalujo said
\nfollowing a closed-door questioning of former finance minister
\nFuad Bawazier and former coordinating minister for economy,
\nfinance and industry Ginandjar Kartasasmita.<\/p>\n
He added that legislators would also question the IMF over the
\ngovernment's overall bank restructuring and economic program.<\/p>\n
Indonesia turned to the IMF for help in 1997 after the country
\nwas hit by an economic crisis which started in the middle of the
\nyear.<\/p>\n
The government via the central bank has since injected a total
\nof Rp 164.5 trillion (US$23 billion) in liquidity supports to
\nhelp domestic banks cope with massive bank runs, particularly
\nfollowing the closure of 16 private banks in November 1997.<\/p>\n
Bank liquidation was a medicine prescribed by the IMF to help
\ncure the country's economic illnesses. Both the government and
\nthe IMF have quietly admitted that closing down the 16 banks was
\na blunder that led to the plunge of public confidence in the
\nindustry.<\/p>\n
In early 1988 the government launched the blanket guarantee
\nprogram, which guarantees all obligations of closed down banks.
\nThe program is a part of and a modification of the liquidity
\nsupport program.<\/p>\n
The controversy surrounding the liquidity support program
\ncenters on an allegation that some Rp 80 trillion of the facility
\nwas channeled through an improper procedure.<\/p>\n
The allegation, which is based on a leaked general audit
\nreport by the Supreme Audit Agency (BPK), has cornered Bank
\nIndonesia.<\/p>\n
Former finance minister Fuad Bawazier was quoted by Sukowalujo
\nas admitting that there was indication of abuse in the liquidity
\nsupport program.<\/p>\n
Fuad said more of the facility had been injected than what the
\nbanks had actually needed.<\/p>\n
There has also been increasing pressure for Bank Indonesia
\nGovernor Sjahril Sabirin to resign.<\/p>\n
But Sjahril, who assumed his position in February 1998, has
\ndenied the allegations and has insisted that he will not step
\ndown.<\/p>\n
Based on the new central bank law, enacted in May 1999, the
\nboard of governors of Bank Indonesia can only be forced to step
\ndown by the House if a crime has been committed.<\/p>\n
BPK is currently conducting its investigative audit, which is
\nexpected to be completed by May this year.<\/p>\n
The House is also conducting its own investigation. Its
\ninvestigation team has so far summoned the former owners of
\nrecipient banks, three former finance ministers, former central
\nbank governor and other high ranking state officials.<\/p>\n
Earlier attempts by the investigation team to question former
\npresident Soeharto failed due to the his poor health.<\/p>\n
The largest chunk of the liquidity support facility was
\nreportedly channeled to banks owned by the family and friends of
\nSoeharto.<\/p>\n
Meanwhile, banking legal expert Pradjoto said problems
\nconcerning the liquidity support policy could not be solved if
\npeople continued to focus on debating the policy because the core
\nof the problem was the abuse of the funds at recipient banks.<\/p>\n
\"There seem to be no efforts at all to prosecute the owners
\nand management of the banks, while the House investigation team
\ncontinues to focus on why the policy was launched,\" he told a
\ndiscussion gathering.<\/p>\n
Pradjoto also criticized the slowness of the Attorney
\nGeneral's Office and the police in resolving the case.<\/p>\n
He suggested the Attorney General's Office form a special team
\nwhich included banking experts to deal with the case.<\/p>\n
He expected a resolution to the case could be accelerated
\nonce BPK and the Development Finance Comptroller (BPKP) had
\ncompleted their separate audits on Bank Indonesia and commercial
\nbanks which received liquidity credits. (rei)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/house-to-summon-imf-over-bank-program-1447893297",
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