Australian firm to help BI audit

Australian firm to help BI audit

JAKARTA (JP): Supreme Audit Agency (BPK) head Satrio B. Yudono
said on Thursday he would ask Australia-based
PricewaterhouseCoopers to help the agency audit the central bank
over the high-profile Bank Bali scandal.

However, Yudono said the audit would focus on the government's
blanket guarantee program for interbank claims in an effort to
prevent a similar incident in the future.

"We are inviting (PricewaterhouseCoopers to help with the
audit) in order to resolve the case once and for all," he told
reporters after meeting with President B.J. Habibie.

"But the important thing is to focus on the system ... to know
what needs to be modified, without getting carried away with the
political aspects of the case. We have to be careful," he said.

The narrowly focused audit described by Yudono appears to be a
far cry from the comprehensive audit demanded by the public, the
House of Representatives and the international community.

According to the new central bank law, Bank Indonesia can only
be audited by BPK. However, the agency can ask for the assistance
of an external auditor.

The law also stipulates that the House can request BPK conduct
a special audit of Bank Indonesia.

The House formally made such a request on Thursday, asking BPK
to audit the central bank over the Bank Bali scandal.

The head of House Commission VIII for finance and banking,
Tayo Tarmadi, said BPK was expected to complete its audit by the
end of August.

"We want the audit to be completed by Aug. 31," he said
following a meeting with House leaders.

Tayo insisted the BPK audit must not simply focus on the
government's interbank claims guarantee system, but check the
transfer of funds from Bank Indonesia to Bank Bali, and the flow
of funds from Bank Bali to other bank accounts.

Minister/State Secretary Muladi said the BPK and
PricewaterhouseCoopers audit would be completed on Sept. 7.

It was the International Monetary Fund (IMF) which first
demanded the central bank be audited by PricewaterhouseCoopers.

IMF deputy managing director Stanley Fischer asked the
government on Aug. 17 to widen the scope of
PricewaterhouseCoopers' investigation into the Indonesian Bank
Restructuring Agency (IBRA) to include Bank Indonesia.

The IMF demanded a probe into Bank Indonesia's role in the
Bank Bali case, as well as an investigation into the flow of
funds from Bank Bali to other bank accounts.

IMF Asia Pacific director Hubert Neiss reiterated on Thursday
that a speedy and satisfactory resolution of the Bank Bali case
was crucial to restoring confidence in the economy and preventing
the country's bank restructuring program from faltering.

Neiss was speaking to reporters after meeting with Habibie.

The scandal centers on the transfer of Rp 546 billion (almost
US$80 million) from Bank Bali to PT Era Giat Prima (EGP) in June.
The money was a commission for the company's aid in helping Bank
Bali recoup interbank claims from closed Bank Dagang Negara
Indonesia (BDNI).

IBRA has faulted the bank for using EGP because the interbank
claims were assured through the government's blanket guarantee
program. The transfer of funds from Bank Bali would have
increased the cost to the state budget for recapitalizing the
bank.

Indonesian banking authorities have said the payment of the
interbank claims to Bank Bali were made according to existing
procedures. IBRA said the interbank claims were verified by Bank
Indonesia.

There have been allegations influential people close to
President Habibie "forced" former Bank Bali president Rudy Ramli
to hire EGP as part of an effort to raise funds to finance
Habibie's presidential bid.

EGP is a general trading company owned by businessmen linked
to the ruling Golkar Party, which has named Habibie its
presidential candidate.

Bank Indonesia deputy governor Subarjo Joyosumarto said on
Thursday a crime was committed in the Bank Bali case, the first
such official acknowledgement since the scandal broke in late-
July.

"We have just given the police the results of BI's
investigation into the Bank Bali case, in which a banking crime
was committed," Subarjo said after meeting with officers from the
National Police and officials from the Attorney General's Office.

Subarjo said the failure to report the payment to EGP to
banking authorities was evidence of a violation of banking laws
by Bank Bali's management.

In a related development, National Police chief Gen.
Roesmanhadi said on Thursday the police obtained permission from
the President to question EGP president Setya Novanto as a
suspect in the case. As a member of the People's Consultative
Assembly, Setya can only be questioned with the prior consent of
the President. (rei/prb)