Rizal says BI board of governors still active<\/p>\n
JAKARTA (JP): Coordinating Minister for the Economy Rizal
\nRamli reiterated Tuesday that members of Bank Indonesia's board
\nof governors who tendered their resignation last week would
\nremain in office until successors had been appointed.<\/p>\n
Rizal said that senior deputy governor Anwar Nasution and four
\nother deputy governors were still responsible for the central
\nbank's monetary policy.<\/p>\n
\"They will remain active until the board of governors has been
\nformed. They still have the authority to determine monetary
\npolicy,\" he told reporters following a meeting with President
\nAbdurrahman Wahid.<\/p>\n
The resignation of Anwar and four other deputy governors,
\nnamely Miranda Gultom, Dono Iskandar, Burhanuddin Abdullah and
\nAchwan, has raised concerns in the currency market that Bank
\nIndonesia would not be able to intervene in the market, due to
\nthe vacuum of authority, if the rupiah dropped.<\/p>\n
Two other deputy governors including Achjar Iljas and Aulia
\nPohan did not resign.<\/p>\n
The five members of the board of governors announced their
\nresignation late on Friday amid calls from the government and
\nlegislators to reshuffle the central bank as part of an effort to
\nresolve the problem of the controversial bank liquidity support
\nfacility. But Anwar said that they will remain in office until
\ntheir successors have been selected.<\/p>\n
The rupiah ended slightly lower on Tuesday at Rp 9,455 per
\nU.S. dollar compared to Rp 9,445 on Monday as investors were
\nworried that Bank Indonesia would be a lame duck, unauthorized to
\nimplement clear monetary policy until the new board of governors
\nwas formed.<\/p>\n
Dealers speculated that the general market perception was that
\nthe appointment of the new leadership at Bank Indonesia might
\ntake longer than anticipated due to the heavy political
\nbargaining process.<\/p>\n
The House agreed late on Monday to the government's proposal
\nto amend the existing central bank law, which was enacted in May
\n1999, to remove the legal obstacles to the replacement of the
\nboard of governors, including governor Sjahril Sabirin who is now
\nunder house arrest awaiting trial for alleged involvement in the
\nBank Bali scandal.<\/p>\n
Director general of law at the Ministry of Justice and Human
\nRights Abdul Gani Abdullah said on Tuesday that the amendment of
\nthe central bank law would allow for the dismissal of members of
\nthe board of governors if they had not been active in office for
\nmore than three consecutive months.<\/p>\n
Gani said that the proposed new clause would put an end to the
\nvacuum of leadership at Bank Indonesia.<\/p>\n
\"(The amendment) will provide an opportunity to possibly
\nreplace a member of the board of governors who is indisposed to
\ndo his or her job, for example, over three consecutive months,\"
\nGani told the Jakarta Post on the sidelines of a meeting with the
\nHouse's consultative body.<\/p>\n
He added that the House could complete the amendment in two
\nweeks time.<\/p>\n
Under the existing central bank law, members of the board of
\ngovernors can not be dismissed unless they have been proven
\nguilty of committing a crime, they are incapacitated or they
\nvoluntarily resign.<\/p>\n
Sjahril has not been active in office since June after he was
\ndetained over alleged involvement in the high profile Bank Bali
\nscandal.<\/p>\n
Sjahril has so far refused to resign despite calls from both
\nthe government and legislators.<\/p>\n
The move to oust Sjahril gained steam following the
\nresignation of Anwar and his colleagues.<\/p>\n
President Abdurrahman Wahid had proposed to the House three
\ncandidates including Anwar and two other Bank Indonesia officials
\n-- Hartadi A. Sarwono and Siti Fadjriah -- for the position of
\nnew Bank Indonesia chief, but the parliament responded that the
\nPresident could not propose the replacement of Sjahril due to the
\nexisting central bank law.<\/p>\n
Gani said that the amendment of the central bank law also took
\ninto consideration other issues, including boosting the
\naccountability of the board of governors and opening the way for
\nthe Attorney General's Office to step into the central bank to
\ninvestigate alleged crimes.<\/p>\n
Gani said that with the amendment, the House could ask members
\nof the board of governors to resign if they failed to meet the
\nmonetary target set up by Bank Indonesia at the beginning of the
\nyear.<\/p>\n
He said that under the current law, members of the board of
\ngovernors could not be held responsible for failure.<\/p>\n
He also said that under the existing law, the Attorney
\nGeneral's Office could not enter into the central bank's affairs
\nto investigate any alleged criminal activity because it was
\nregarded as an intervention by the government.<\/p>\n
Bank Indonesia has been roiled by the controversial Rp 144.5
\ntrillion liquidity support injected by the government, via the
\ncentral bank, to ailing domestic banks between September 1997 and
\nearly 1999.<\/p>\n
Bank Indonesia has been accused of mismanaging the liquidity
\nsupport and of weak supervision which allowed the recipient banks
\nto misuse around Rp 80 trillion of the loan facility.<\/p>\n
Meanwhile, the Indonesian Democratic Party for Struggle (PDI-
\nP) said Tuesday that it would support Siti Fadjriah as the new
\nchief of the central bank.<\/p>\n
PDI-P executive Pramono Anung said that the party rejected the
\nother two candidates.<\/p>\n
\"Siti is the right choice for a regeneration of Bank
\nIndonesia,\" Pramono told reporters following the party's weekly
\nmeeting with Chairwoman Vice President Megawati Sukarnoputri.
\n(rei\/02)<\/p>",
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