Bambang faults IBRA concerning draft bill process

JAKARTA (JP): The Indonesian Bank Restructuring Agency (IBRA) will have to drop its plans to submit a controversial draft bill to the House of Representatives because the process has been improper, according to Finance Minister Bambang Sudibyo.

Bambang said that based on existing procedures, an initiative to draft a law must come from his office, then be presented to the president before being approved by the House.

"If the process is wrong, why should they make the proposal to the House," Bambang said in response to a query from reporters.

"I have already told Cacuk that he was wrong," he added, referring to Cacuk Sudarijanto, chairman of IBRA.

The draft bill, which was expected to be proposed to the House next month, has been controversial for two reasons. First, under the proposal, IBRA would report directly to the president, rather than the finance minister. Second, the bill was drafted quietly without consulting the finance minister.

Placing IBRA beneath the president has raised concern that IBRA policy could be influenced by the president.

The disagreement between Bambang and Cacuk is seen as further evidence of a conflict between the finance minister and the chairman of an agency controlling some Rp 600 trillion worth of assets, more than half the country's gross domestic product.

Asked if he would impose a sanction on Cacuk, Bambang said: "Until now, I have not considered giving any sanction."

Cacuk said earlier that the agency drafted the bill because it is necessary to implement good governance at IBRA as committed by the government in its letter of intent to the International Monetary Fund.

"I took the initiative because it's in the interest of the agency," he said.

But Bambang retorted that the letter of intent didn't call for introduction of a new law.

"If you want to uphold good corporate governance it must be done through proper procedures," Bambang said.

Cacuk explained that the Supreme Court has recommended that government ruling No 17/1999 on IBRA be upgraded into a law which would help the agency to become more effective and protect it from being sued by outside parties.

He also said that based on studies made by consulting firm McKenzie, similar agencies overseas were also directly responsible to the President.

Cacuk said that McKenzie was appointed by IBRA through a tender process involving five other firms to provide consultation to improve governance at the agency.

He said that McKenzie had recommended the formation of an oversight board to preclude concern over intervention by the president.

Cacuk said that the seven-member oversight board would be chaired by the IBRA chairman. While the finance minister, the coordinating minister for economy, finance and industry, and the attorney general would be members.

He said that the remaining three "independent" members would either come from academia or foreign businessmen who had no interest in IBRA.

"But this is absurd. How can an oversight board be effective if it is chaired by the IBRA chairman," said noted economist Sri Mulyani.(rei)