BI faces a dilemma over banking secrecy code

JAKARTA (JP): Bank Indonesia (BI) deputy governor Achjar Iljas said on Monday the central bank had a strong commitment to root out corruption, but warned that breaching the bank secrecy code for the sake of fighting corruption would damage confidence in the country's banking sector.

He said the central bank would allow an investigation into a bank deposit only if it was done through an "appropriate mechanism".

"If we don't play by the law, people will be affected and lose confidence in the banking sector which in turn may trigger massive capital outflow," he said on the sidelines of a meeting with Bappertal, a non-governmental reform watchdog.

Bappertal said Indonesia had been battered by rampant corruption by government officials and called on the central bank not to use the bank secrecy code to protect corrupt officials.

Bappertal said the disclosure of details of Attorney General Andi Ghalib's bank account would not cause confidence in the bank concerned to tumble.

"It's too premature to say that the leaking of details of the bank account will hurt confidence in domestic banks. On the contrary, rooting out corruption will boost the confidence of businesspeople and foreign investors (in the economy) who often have been blackmailed by government officials," the NGO said.

Andi Ghalib is currently under fire after the Indonesian Corruption Watch announced at a media conference that it had authentic bank documents showing that Ghalib had received some Rp 13 billion from businesspeople.

Some of the businesspeople are under investigation by Ghalib's office for suspected banking violations.

Ghalib denied any wrongdoing, saying the money deposited in Bank Lippo was received as a donation for the Indonesian Wrestling Association which is under his chairmanship.

"We also have a commitment to root out corruption, but we also have to adhere to the law," he said, citing Banking Law No. 10/1998.

The banking law, which was approved in November, stipulates that the liability side (deposits) of a bank is protected by the secrecy code.

Achjar said people violating the secrecy code, including Bank Indonesia officials, could be sentenced to between one year and four years in prison and fined between Rp 10 billion and Rp 200 billion.

He said that under certain circumstances the Bank Indonesia governor would allow the disclosure of details of a depositor's bank account.

Achjar said the minister of finance could ask for a disclosure for tax audit purposes.

He added that the police, the Attorney General's Office and the Supreme Court could also ask for disclosure for the purpose of a criminal court case.

"But this can only be done if a suspect has been named," he said.

President B.J. Habibie has so far declined to dismiss Ghalib from his post to allow a police investigation of his alleged wealth.(rei)