Auditing the supervisor

Auditing the supervisor

Bank Indonesia, which is among the institutions assigned to supervise all banks in Indonesia, is now in the spotlight because it is being audited by the Supreme Audit Agency. In mid-January 2000 the results will be made public through the House of Representatives.

Many are hopeful yet worried about the results of the monetary authority. The bank has so far had extraordinary power over the flow of funds; its executives determine policies on allocating credit and liquidity. With its magic telescope, the central bank knows all the dirt of the banking world. The bank has a list of good businesspeople and of "bandits", both in the business world and among banking executives themselves.

But the leaders of Bank Indonesia are no angels. They are humans vulnerable to life's temptations. A number of Bank Indonesia officials have been forced to face law enforcers on charges of collusion with bank executives under their supervision.

It is thus understandable why Anwar Nasution, before he became the bank's deputy governor, likened the bank to a "den of thieves". Even Coordinating Minister for the Economy, Finance and Industry Kwik Kian Gie recently said the actions of Bank Indonesia were "mysterious".

Still fresh in our minds is that at the end of the New Order government, a number of BI executives were investigated by police and several among them were named suspects. Nothing more was heard of the investigation.

Investigating violations and abuses of power at Bank Indonesia is no easy task. Laws and regulations under the guise of banking secrecy makes for a limited vision of law enforcers.

Therefore, the audit conducted by the Supreme Audit Agency will end the mystery whether the bank's executives are angels or bandits.

It is worth noting the warning of the chairman of the National Economic Council, Emil Salim, that the government must anticipate the worst possibilities following the revelation of the bank's warts to the public.

If the warts cannot be eradicated, the only cure is total excision. All executives who would not be able to be kept must go, to be replaced with new, morally clean ones. Investigate, and bring to court and punish, those who have misused state money. The same must apply to all businesspeople who acquired funds illegally through Bank Indonesia.

Media Indonesia, Jakarta