Huge loan scam revisited<\/p>\n
If determining the proportion of burden-sharing, not
\nestablishing justice, is really the main purpose of another
\nindependent audit to be conducted on the alleged misuse of Rp
\n138.4 trillion (US$13 billion) in emergency liquidity credit
\ngiven by the central bank in 1997 and 1998, then such an exercise
\nwill simply end up being another blatant mockery of the law.<\/p>\n
We were earlier encouraged by the revelation by a Bank
\nIndonesia executive that the International Monetary Fund (IMF)
\nhad asked the government to conduct a new independent audit of
\nthe suspected huge loan scam.<\/p>\n
But it was a great shock to learn, from the explanation made
\nby Minister of Finance Boediono last week, that the audit was not
\ndesigned as a new investigative measure but was aimed at
\nclarifying the proportion of sharing between the government and
\nthe central bank related to the huge losses incurred by the
\nprogram.<\/p>\n
If Boediono's explanation was entirely correct, the IMF's
\nrequest would not only waste money on foreign auditors but would
\nalso repudiate Indonesia's Supreme Audit Body (Bapeka), which
\ncompleted an audit of the loans in cooperation with the
\naccountancy firm, Klynveld Peat Marwick Goerdeler, in late 2000.
\nThat recommendation could be the second biggest mistake made by
\nthe IMF in handling the country's economic crisis after its first
\nblunder in October, 1997 when it recommended the closure of 16
\ncommercial banks, even though a full guarantee scheme for bank
\ndepositors and creditors had not yet been established.<\/p>\n
Yet we find Boediono's statement rather confusing because the
\nIMF has never explicitly asked for a new independent audit of the
\nliquidity credit. The Aug. 27 Letter of Intent between the
\ngovernment and the IMF does stipulate the following measure:
\nFinalize the burden-sharing agreement on liquidity credit between
\nBank Indonesia and the government and resolve all outstanding
\nconcerns for Bank Indonesia and the Indonesian Bank Restructuring
\nAgency (IBRA) regarding the liquidity credit arrangements that
\naffected the results of the audit carried out in 2000. This
\nmeasure is set to be completed by the end of next month.<\/p>\n
But determining a burden-sharing proportion alone does not
\nwarrant another costly independent audit. Even if this new audit
\nwould recommend changes in the sharing proportion for the losses
\ninflicted by the alleged loan misuse, they would mean nothing in
\nso far as the effort to recover the misused loans is concerned.
\nAny increase or decrease in the Rp 24.5 trillion share of losses,
\nwhich had been set for the central bank earlier this year, would
\nnot make any substantial impact on state revenues. It would
\nsimply move money from one pocket to another pocket of the state.<\/p>\n
Should a new investigative audit be conducted it should be
\ndesigned to follow up the Bapeka audit findings that Rp 138.4
\ntrillion of the Rp 144.5 trillion in emergency liquidity loans
\nextended by the central bank to the banking industry was provided
\nin violation of the prudential ruling regarding Bank Indonesia's
\nrole as the lender of last resort.<\/p>\n
A new audit should focus on verifying Bapeka's conclusions
\nthat: A significant portion of the credit was not secured with
\nadequate collateral; many banks received credit far in excess of
\ntheir assets; Rp 80.4 trillion of the total loans was misused by
\nthe 48 recipient banks for currency speculation and financing
\naffiliated businesses.<\/p>\n
What made the misuse even more heart-wrenching was Bapeka's
\nfindings that, while the central bank went all out to defend the
\nrupiah - which plummeted to as low as Rp 16,500 to the dollar in
\n1998 - many recipient banks used the loans from the central bank
\nfor dollar speculation.<\/p>\n
It was these findings that should further be verified to
\nresolve the controversy and alleged loan misuse, once and for
\nall, through a proper due process of the law against executives
\nof Bank Indonesia and the Indonesian Bank Restructuring Agency,
\nbank owners and managers responsible for the loan misuse.<\/p>\n
The authorities had already smelled something fishy about the
\nliquidity credit extension during the height of the economic
\ncrisis, which resulted in the police interrogation of three
\nformer directors (now deputy governors) of Bank Indonesia in late
\n1998. But the investigation was halted without any clear
\nconclusion. They were investigated again this year but again
\nwithout any follow up measures.<\/p>\n
Worse still, none of the bankers found by the Bepeka auditors
\nto have misused the credit have been brought to court. The
\nspecial investigative committee assigned by the House of
\nRepresentatives to probe the suspected loan scam also failed
\nmiserably to force the Attorney General's Office to push through
\nwith its investigations into the huge loan scandal.<\/p>\n
If the government is really serious about its anti-corruption
\ncampaign, it should give top priority to this huge loan scandal,
\ninstead of wasting its resources on petty cases of malfeasance.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/huge-loan-scam-revisited-1447893297",
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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