BI asked to return Rp 14.5t in allegedly misused funds

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