IMF irked as it awaits Indonesia scandal report<\/p>\n
WASHINGTON (Dow Jones): While appalled at the \"humanitarian
\ndisaster\" unfolding in East Timor, International Monetary Fund
\nofficials are also fuming at signs that Indonesia is stalling on
\nits promise to get to the bottom of the so-called Bank Bali
\nscandal.<\/p>\n
Stanley Fischer, the IMF's first deputy managing director,
\nstrained to make this point as diplomatically as he could during
\na media briefing earlier Thursday.<\/p>\n
However, he stressed that the IMF views as a \"huge issue\"
\nallegations that around US$70 million was transferred out of Bank
\nBali earlier this year to the account of a senior official in the
\nruling Golkar Party.<\/p>\n
Indonesia's International Review Committee, chaired by former
\nfinance minister Mar'ie Muhammad, was directed to investigate and
\nit authorized PricewaterhouseCoopers to conduct an audit of Bank
\nBali.<\/p>\n
The fate of this report was uppermost in Fischer's mind when
\nhe reviewed developments in Indonesia Thursday.<\/p>\n
\"It should have been presented to Mar'ie Muhammad, who has
\nbeen appointed to deal with these issues as one of the most
\nrespected men in Indonesia,\" Fischer said.<\/p>\n
\"And there seem to be delays in giving him the study, and
\nthere seem to be questions about precisely what is in that study.
\nThese are the issues that have to be resolved,\" he said.<\/p>\n
Fischer said the restructuring of Indonesia's banking sector
\nis \"at the heart\" of the IMF's $12-billion loan agreement with
\nJakarta.<\/p>\n
The government is pressuring the banks, many of them state-
\nowned, to deal with their bad debts or face closure. Some banks
\nare seeking to avoid closure and bolster their capital reserves
\nby collecting long-overdue debts.<\/p>\n
\"If that (money) is being used for political purposes, which
\nis what the charge is, then we're in an extremely difficult
\nsituation,\" Fischer said.<\/p>\n
The crisis in East Timor represents a double-edged sword for
\nthe IMF, according to some within the IMF.<\/p>\n
International outrage over Jakarta's apparent antipathy toward
\nthe slaughter of East Timorese provides the IMF with determined
\npolitical support for any future steps it takes to punish
\nIndonesia.<\/p>\n
However, it also deflects attention from what might be the
\nmost dramatic public exposure of official corruption in Indonesia
\nthrough the disclosure of the Bank Bali scandal.<\/p>\n
Regardless, unless Jakarta takes steps to facilitate a swift
\nand full examination of the Bank Bali scandal, the IMF will
\nsuspend staff missions.<\/p>\n
IMF management will consider whether they should send the
\nSeptember staff mission to Jakarta during meetings Friday and
\nover the weekend.<\/p>\n
Hubert Neiss, the IMF's director for Asia and the Pacific,
\nmade it clear in an interview on Cable News Network earlier
\nThursday that the IMF team is unlikely to be packing its bags in
\ncoming days.<\/p>\n
\"The IMF mission is presently on hold,\" Neiss said. \"The
\ndecision (to send it) at this point hasn't been made.\"<\/p>\n
He added the IMF hasn't yet \"threatened to cut off funding\"
\nbut added that the IMF will work with the Indonesian authorities
\nonly \"under the right conditions.\"<\/p>\n
\"What we are doing is to review the situation and decide the
\nappropriate time when we can have the next renewed discussions\"
\non another installment from the $44 billion international rescue
\npackage for Indonesia, Neiss said.<\/p>\n
In Auckland, Indonesia's Coordinating Minister for Economy and
\nFinance Minister Ginandjar Kartasasmita said Friday it isn't
\nappropriate to use international financial institutions to pursue
\npolitical goals, such as an easing of violence in East Timor.<\/p>\n
\"It is really inappropriate to use the fund, the IMF and the
\nWorld Bank, for political purposes. It would set a bad precedent.
\nThis time it is Timor, next time it is what?\" Ginandjar told
\nreporters.<\/p>",
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