BI audit 'should focus on misuse of liquidity support'
BI audit 'should focus on misuse of liquidity support'
JAKARTA (JP): The Supreme Audit Agency's planned audit of Bank
Indonesia should focus on the possible misuse of the estimated Rp
145 trillion (US$21.32 billion) in liquidity support given to
local banks, according to a legislator.
A member of the House of Representatives Commission VIII for
finance, banking and state budget, Ichsanuddin Noorsy, said on
Wednesday the Government Finance and Development Comptroller
(BPKP) disclosed during a recent closed-door meeting with the
House that some Rp 60 trillion of the liquidity support might not
have been used by recipient banks to repay depositors, but rather
was diverted to settle overseas debts.
"This allegation has to be completely investigated because
we're talking about a large sum of taxpayer money here," he told
The Jakarta Post.
Under the new central bank law, Bank Indonesia will be
regularly audited by the Supreme Audit Agency, a state
institution answerable only to the House.
Previously, Bank Indonesia was audited by BPKP, a government
agency whose independence was suspect.
The government said in its latest Memorandum of Economic and
Financial Policies to the International Monetary Fund that the
first audit under the new central bank law would be completed by
Nov. 1, 1999.
Anwar Nasution, who was sworn in as the central bank's senior
deputy governor on Wednesday, said the plan to regularly audit
Bank Indonesia was "a good thing".
Anwar has been a staunch critic of the central bank since the
early 1980s, describing it as a "den of thieves".
Bank Indonesia extended a huge amount of liquidity support
last year to help banks meet massive withdrawals as confidence in
the banking sector plunged to its lowest levels.
The costly liquidity support program was part of the
government's policy of guaranteeing depositors' money to prevent
runs on banks and protect the local banking industry.
The liquidity support channeled by Bank Indonesia was
converted to government debt to the central bank.
The government plans to issue bonds to repay the debt. The
bonds' interest rate will be covered by the state budget.
Finance minister Bambang Subianto recently told a House
hearing that the amount of liquidity support injected into local
banks totaled Rp 145 trillion.
Rumors also emerged last year that the liquidity support given
to the banks was partly used by bank owners to buy US dollars in
an attempt to profit from the weak rupiah.
Part of the responsibility of the Indonesian Bank
Restructuring Agency (IBRA) is to recoup the liquidity support
from bank owners.
Some bank owners have pledged various fixed assets, including
shares in companies, to repay their debts. Among these owners are
Sudono Salim and Usman Admadjaja, the former owners of
nationalized Bank Central Asia and Bank Danamon, respectively.
Other businessmen who have surrendered assets to repay the
liquidity support owed by their banks include Mohamad "Bob"
Hasan, Sjamsul Nursalim and Samdikun Hartono, the former owners
of the now closed Bank Umum Nasional, Bank BDNI and Bank Modern,
respectively.
IBRA plans to sell the assets ceded by the businessmen to
raise revenue, which in turn will be used to help finance the
government-sponsored bank recapitalization program. (rei)