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)