Fri, 09 Jun 2000

BI insists bad bankers cannot lead state bank

JAKARTA (JP): Bank Indonesia insisted on Thursday that any bankers who failed the central bank's fit and proper test could no longer lead a bank in the country even if the banker was President Abdurrahman Wahid's close friend.

Bank Indonesia director for banking supervision Fadjrijah warned the government not to force its will by installing people who had not passed the central bank's test to lead a state bank.

"If a bank is led by people not acknowledged by Bank Indonesia, it means the bank is illegal," she told a news conference.

"A banker (who hadn't passed the fit and proper test) can't sign cheques or other letters sent to Bank Indonesia... He can't communicate with Bank Indonesia," she added.

Fadjrijah was responding to a question about what would happen if the government, as a shareholder in state banks, insisted on installing its preferred men to lead the banks despite a failure of the fit and proper test.

The central bank's test turned into a high profile controversy after President Abdurrahman "Gus Dur" Wahid reportedly asked Bank Indonesia to repeat the fit and proper test conducted for some 35 bankers of state banks. This was apparently because in February Prijadi Praptosuhardjo, Gus Dur's close friend, didn't pass the test.

Prijadi, now a director at state Bank Rakyat Indonesia (BRI), had been championed by Gus Dur to become the new president of the bank, reports said.

Bank Indonesia Governor Sjahril Sabirin insisted that the central bank would not repeat the fit and proper test, except if the government had new positive information on Prijadi.

Sjahril caught the attention of the media after he was named a suspect in the high profile Bank Bali scandal by the Attorney General's Office on Monday.

Sjahril has denied any involvement, and said that this was merely a political ploy to oust him by force from the central bank.

He also said that Gus Dur had demanded that the central bank repeat the February fit and proper test several days before he become a suspect in the Bank Bali case.

Bank Indonesia has not publicly declared which of the 35 senior bankers failed to pass the test.

Fadjrijah said that according to Bank Indonesia's ruling, the result of the tests were classified and only made known to the banker in question, the controlling shareholders of the bank and the top management.

Meanwhile, Prijadi claimed on Wednesday that he had not participated in the central bank's February fit and proper test.

But Fadjrijah denied this, pointing out that Prijadi, as well as two commissioners and several other directors of BRI, had signed the result of the fit and proper test.

Fadjrijah said that the fit and proper test was conducted based on the track record of the banker in the past, compiled by the central bank surveillance division.

She said that the results of the fit and proper test would be related to the specific banker, and if the banker had valid evidence to drop the negative information, the central bank would pass the banker.

Fadjrijah said that the final result was made by Bank Indonesia's board of governors.

She said that there were three categories of results, including a pass, a pass with certain conditions and a failure.

She said that if a banker passed with certain conditions, the banker must sign an agreement that he would not repeat his past mistakes.

Under an agreement with the International Monetary Fund, the government must reshuffle the management of the ailing state banks as a precondition for their recapitalization.

The central bank regularly conducts fit and proper tests on existing bank managers in the country to avoid corrupt practices and massive violations of banking rulings as happened in the past, leading the country to its current economic crisis.(rei)