BI asked to return Rp 14.5t in allegedly misused funds

The Jakarta Post, Jakarta

The Ministry of Finance has asked Bank Indonesia to return Rp 14.45 trillion in blanket guarantee funds, which the country's supreme auditor claimed were abused by the central bank.

The request was made in a letter dated Aug. 29, Minister of Finance Boediono said on Monday during a joint hearing between the House of Representatives Commission IX on financial affairs the ministry, Bank Indonesia and the Indonesian Bank Restructuring Agency (IBRA).

The central bank has repeatedly insisted that there were no irregularities in the use of the funds.

However, Boediono said, until the matter had been verified, the central bank must return the funds to account 502, where the funds were previously stashed, detik.com reported.

The Monday hearing followed a recent report issued by the Supreme Audit Agency (BPK), saying that some Rp 20.9 trillion had been misused by the central bank and IBRA.

The report was the result of an investigation undertaken by the agency at the request of the House in 2001, upon learning that most of the funds (about Rp 53.8 trillion) in the account had been used.

The funds -- which belong to the government and are deposited at the central bank -- are used to cover the financial obligations of closed banks as part of the government's blanket guarantee program. The program was introduced in the late 1990s to help restore confidence in the ailing banking industry.

The audit request was made after the government had decided to set up a second account worth about Rp 40 trillion for the same purpose. The new account is known as the 509 account.

The audit report said that of the Rp 20.9 trillion of allegedly-abused funds, Rp 17.77 trillion had been used by the central bank and the remainder by IBRA.

Of the 17.17 trillion funds used by the central bank, Rp 14.45 trillion was allegedly taken by the bank from the account in May 2000. BI regarded the funds as an additional liquidity supports loan (BLBI) on top of the Rp 144.5 trillion in funds injected by the bank under the first phase BLBI program.

The central bank injected hundreds of trillions worth of funds under the program to prevent the banking sector from collapsing after being severely hit by the crisis in the late 1990s.

No decisions were taken at the hearing, as legislators asked for more time to discuss the matter. The legislators will hold another hearing with all related parties in the near future once the internal discussion are completed.

In Monday's hearing, both IBRA and BI reiterated that there were no wrongdoings in the use of the funds and that all had been conducted in line with existing rulings.

IBRA Chairman Syafruddin Temmenggung even asked BPK to review its findings, by conducting an investigative audit to clarify the matter.

"I can assure you that, not a single cent of state funds (that had been used) are not accounted for," Syadruddin told legislators.

Alleged misuse of 502 account funds

(in trillions of rupiah)

1. Bank Indonesia 17.77

1.1. BPR's claims 0.27

1.2. Interbank claims (EOP) 3.18

1.3. Forex interest claims 0.11

1.4. Additional BLBI 14.45

1.5. PSWE claims 0.27

1.6. BI's forex deposit 0.67

2. IBRA 3.15

2.1. Third Party Liabilities 2.01

2.2. Interbank claims 0.86

2.3. Off shore claims 0.28

Total 20.90

EOP : Exchange Offer Program

PSWE: Post-Shipment Export Drafts

BLBI: Bank Indonesia liquidity facilities

Source: BPK