Amendment of BI law may aid dismissal of Sjahril

Amendment of BI law may aid dismissal of Sjahril

JAKARTA (JP): Coordinating Minister for the Economy Rizal
Ramli proposed on Monday a four-point amendment of the central
bank law which would eliminate the legal obstacles to ousting
Bank Indonesia governor Sjahril Sabirin.

But Rizal asserted that the amendment was aimed primarily at
boosting the public accountability of Bank Indonesia.

"Public accountability is needed to enable the House of
Representatives to oversee and assess the performance of Bank
Indonesia as an institution," he said during a plenary session of
the House, which was also attended by Finance Minister Prijadi
Praptosuhardjo.

"Independence without accountability would make Bank Indonesia
like a state within a state, particularly because it could set
its own targets and design its own budget, and its performance
couldn't be evaluated openly," he added.

Rizal has repeatedly said that public accountability at the
central bank should have been introduced first before granting it
independence in May, 1999.

The current central bank law, which ensures the independence
of Bank Indonesia, was approved by the House in May 1999 and was
immediately ratified by then president B.J. Habibie.

But analysts have suspected that the amendment of the central
bank law is being proposed mainly to eliminate the legal hurdles
to the removal of Sjahril from Bank Indonesia.

President Abdurrahman Wahid has called for the reshuffling of
Bank Indonesia's top management, particularly the replacement of
Sjahril, in a bid to rid the central bank of the corrupt
practices of the past. Sjahril has so far declined to step down.

According to the central bank law, a member of the bank's
board of governors cannot be replaced unless he or she has been
proven to have committed a crime, has been incapacitated or
voluntarily resigns.

Senior deputy governor Anwar Nasution and four other deputy
governors tendered their resignations recently as part of a deal
with the government to end the dispute over the bank liquidity
support controversy.

Rizal said that the amendment of the central bank law included
possible dismissal by the House members of the board of governors
who had not been active in office for three consecutive months or
whose performance had not been satisfactory.

He said that the amendment would allow one or two ministers to
attend the weekly Bank Indonesia board of governors meeting on
monetary policy.

"This is important for the coordination of fiscal and monetary
policies," he said.

The government has also proposed that Bank Indonesia furnish
opinions and considerations to the government on the draft state
budget and other policies.

The factions of the House are scheduled to debate the proposed
amendment on Wednesday and Thursday, and a special House team
will debate it from Dec. 1 through Dec. 6.

The House is expected to approve the amendment on the evening
of Dec. 6 before the legislators start their one-month recess on
Dec. 11.

It is not yet clear whether the government will immediately
propose to the House the nominees to replace Sjahril after the
amendment of the central bank law has been passed.

The government has proposed Anwar and two other Bank Indonesia
officials, namely Siti Fadjriah and Hartadi Sarwono, for the post
of senior deputy governor.

The House is expected to hold a "beauty contest" (fit-and-
proper test) on Wednesday before arriving at a final decision.

Separately, Sjahril, who is currently under house arrest over
his alleged involvement in last year's Bank Bali financial
scandal, has sent a letter to House Speaker Akbar Tandjung
expressing his concern over the situation at the central bank.

Sjahril said in the letter that the board of governors could
not make major decisions until the five members of the board of
governors who had resigned earlier had been replaced.

"The current uncertainty is certainly worrying," Sjahril said.

In the letter, Sjahril also said he had no objection to the
planned amendment of the central bank law even if it would end up
with his dismissal from Bank Indonesia.

He said that he had declined to resign from office in a bid to
uphold the existing law that guarantees the independence of Bank
Indonesia.

Separately, Akbar said that the plan to replace the Bank
Indonesia chief could not be completed by the House before the
recess because it had to await the approval of the amendment of
the central bank law.

But Akbar said that the House could continue processing the
replacement of the senior deputy governor before the proposed
amendment was approved.

Akbar also denied rumors that his Golkar Party was making
political moves to install its own people at the helm of Bank
Indonesia. (rei)