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)