Tue, 26 Aug 2003

BI challenges BPK's audit findings

The Jakarta Post, Jakarta

Bank Indonesia has denied any wrongdoing in the alleged misuse of trillions of rupiah in state funds stashed in a government account, as stated in a recent audit report issued by the Supreme Audit Agency (BPK).

Central bank Governor Burhanuddin Abdullah said on Monday that, to the best of his knowledge, there were no irregularities in the use of funds in the 502 account, specially designed under the government's bank blanket guarantee.

While calling the report "tendentious", Burhanuddin also called for a thorough investigation to clarify the matter.

"I think we all must check (the validity of) the findings, because it is tendentious," he said.

BPK announced last week that some Rp 20.9 trillion (US$2.52 billion) in the 502 account had been allegedly misused by the central bank and the Indonesian Bank Restructuring Agency (IBRA).

The BPK audit report was the result of an investigation undertaken at the request of the House of Representatives in mid- 2001, after 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 decided to set up a second account worth about Rp 40 trillion for the same purpose. The new account is now known as the 509 account.

House Commission IX on financial affairs, to which the BPK delivered the results of its audit, said it would hold a hearing with the government, including Bank Indonesia and IBRA, to clarify this matter.

Paskah Suzetta, deputy chairman of the commission, said the hearing would likely take place sometime next month, to give government officials time to prepare.

Burhanuddin said he welcomed the meeting and the opportunity to discuss the matter.

"I think it will be good. We are obliged to explain things that need explanation," he said, while insisting the central bank had used the funds properly.

Anwar Nasution, Bank Indonesia senior deputy governor, said there was little chance the allegations of misuse were true. "I think the use of the funds have been accountable."

However, should the allegations prove true, Anwar said whoever was responsible would be punished.

"If there was misuse, we should leave it to the Attorney General's Office. Put the guilty party in jail."

Alleged irregularities in 502 account

(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 20.9

EOP : Exchange Offer Program

PSWE: Post-Shipment Export Drafts

BLBI: Bank Indonesia liquidity facilities

Source: BPK