IMF recognizes failure to oversee bank reform<\/p>\n
JAKARTA (JP): The International Monetary Fund (IMF) admitted
\nthat it had failed in safeguarding Indonesia's crucial bank
\nrestructuring program, according to noted economist Sri Mulyani.<\/p>\n
Sri said on Tuesday that lack of supervision and transparency
\nhad led to a series of banking problems, including the high-
\nprofile Bank Bali scandal.<\/p>\n
\"The IMF admits that they could not fully control the
\nimplementation of the bank restructuring program,\" she told
\nreporters after a three-hour meeting on the bank restructuring
\nprogram between Indonesian economists, IMF technical experts, the
\nWorld Bank and Bank Indonesia.<\/p>\n
Sri said that this was very disturbing because many had
\nassumed that the IMF was fully in charge of overseeing the bank
\nrestructuring program.<\/p>\n
\"But the IMF executives admitted that they have a limited
\ncapacity to oversee what the government is doing,\" she said.<\/p>\n
She explained that the IMF had made a fatal mistake
\nin assuming that Indonesia's bank restructuring program would be
\nclosely controlled by the public and the House of
\nRepresentatives.<\/p>\n
\"But the assumptions turned out to be entirely wrong,\" Sri
\nsaid.<\/p>\n
Indonesia in April launched a massive bank restructuring
\nprogram estimated to cost some Rp 550 trillion (US$70.5 billion).
\nThe program is seen as a crucial step toward the country's
\neconomic recovery.<\/p>\n
But the restructuring program received a major blow following
\nthe widespread publication of the Bank Bali scandal which
\nimplicated several senior officials in charge of the program and
\nbusinessmen close to President B.J. Habibie.<\/p>\n
The Bank Bali scandal revolves around the \"illegal\" transfer
\nof some US$80 million from the bank to a private firm linked to
\nHabibie's inner circle, which allegedly raised funds to bankroll
\nHabibie's election.<\/p>\n
The police is currently investigating the case.<\/p>\n
The IMF has demanded that the government disclose the full
\nPricewaterhouseCoopers (PwC) investigation report on the Bank
\nBali scandal, but the authority turned down the demand citing the
\nbanking secrecy code.<\/p>\n
The IMF and the World Bank have consequently suspended further
\naid disbursement to Indonesia.<\/p>\n
Sri said the IMF asked the Indonesian people to be more active
\nin supervising the costly bank restructuring program.<\/p>\n
She explained that the public has the right to get information
\nabout the banking program, especially because the recapitalized
\nbanks are now majority-owned by the government.<\/p>\n
\"For example, we should know what's happening with Bank
\nMandiri, what their business plan is and why has the cost of
\nrecapitalizing state banks soared to more than Rp 137 trillion
\n($17.3 billion),\" Sri said.<\/p>\n
Bank Mandiri is a newly formed bank resulting from the merger
\nof four state banks.<\/p>\n
\"We also want to know more about the recapitalization program
\nof nine private banks. What are their business plans, and why are
\nthey being the first banks to be recapitalized.<\/p>\n
\"This kind of information has not been available to us,\" she
\nsaid, regretting that previously the IMF itself had never talked
\nto independent economists.<\/p>\n
\"We also want to know what guarantee we have that the
\nrecapitalization funding is not being transferred by private
\nbanks to related business groups.\"<\/p>\n
Sri added that several political parties had expressed concern
\nduring the meeting over the lack of transparency on the part of
\nthe Indonesian Bank Restructuring Agency (IBRA) in selling its
\nmultibillion dollar assets.<\/p>\n
\"How can we be so sure that the proceeds do not go into other
\npeople's pockets?\"<\/p>\n
Sri suggested that an independent banking commission be set up
\nto complement the existing Independent Review Committee (IRC).<\/p>\n
\"The oversight is not effective if such a massive
\nrecapitalization program is supervised by the IRC alone, which
\nhas only a skeleton staff.\"<\/p>\n
In a related development, Chairman of the National Development
\nPlaning Board (Bappenas) Boediono confirmed on Tuesday that the
\nSupreme Court would soon issue a legal opinion on whether to
\nallow the release the full PwC audit report on the Bank Bali
\ncase.<\/p>\n
He said that a legal basis was needed because such a
\ndisclosure might violate the banking secrecy code.<\/p>\n
The Supreme Audit Agency (BPK) has insisted that the complete
\nPwC audit cannot not be released because it contains information
\non the personal bank accounts of certain people.<\/p>\n
BPK said that disclosing such information would violate the
\nbanking secrecy code. (rei)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/imf-recognizes-failure-to-oversee-bank-reform-1447893297",
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