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