Bill passed to help curb graft

Bill passed to help curb graft

Dadan Wijaksana, The Jakarta Post, Jakarta

The House of Representatives approved on Thursday the state
finance bill which is meant to ensure transparency and
accountability in managing state finances.

It is hoped that the move will help curb the massive
corruption by state institutions.

Minister of Finance Boediono told legislators during a plenary
session at the House that the bill would pave the way for meeting
"international best practice" standards and legislating good
governance principles.

"This is part of our effort to install good governance with
regard to state financial management, which needs to be carried
out in a professional, open and accountable manner," Boediono
said.

Under the newly approved bill, if any irregularities in the
use of state funds are found, not only will officials in charge
of the funds have to pay for the losses, they can also be put in
jail for the crime.

Irregularities are defined as any difference in the use of
state funds between the figure set out in the state budget and
the amount used in the implementation stage, which is not
properly accounted for.

The bill also emphasizes the principle of equality before the
law, meaning that any officials ranging from a leader of a state-
funded project to head of a state institution or minister who
have committed the wrongdoing will be punished equally.

All these items were absent before in the country, mostly due
to an unwillingness to provide a legal basis to back them up.
This should partly explain why various findings of irregularities
in the use of state funds have rarely been followed up on, with
those responsible for misusing them still not only unpunished,
but still serving in their government posts.

The most recent revelation by the Supreme Audit Agency (BPK)
was that throughout 2001 and 2002, it had found Rp 456.3 trillion
(about US$60 billion) worth of irregularities and abuse of state
funds, mostly in the implementation of 2001 and 2002 state
budgets.

BPK said that the findings were the result of an inspection
which covered the implementation of budgets in 2001 and 2002 for
regional and central governments, and state companies operating
under the central government and in the regions.

However, despite the huge losses -- which amount to close to
one third of the country's total outstanding debts -- no follow
up action has been taken, let alone punishing those responsible
for the losses.

Such lack of accountability has been going on for years, but
Boediono was hopeful that the passage of the bill would mark a
milestone for the reform of financial management of public money,
which could prevent further corruption and minimize potential
state losses.

The law, however, has yet to stipulate detailed information on
the punishment in terms of fines and prison time, because that
will be discussed during the deliberations on the state treasury
bill and the state audit bill, which are considered to be part of
a package under the state finance bill.

Aside from the draft law on state finance, the government in
2000 also submitted to the House the other two draft laws.

"Yes, the three are part of one package. The state finance
bill is a sort of a grand concept that would lay the foundation
for the deliberation of the other two.

"Everything that specifies all the operational technicalities
for the state finance bill will be fully described in the two
drafts," Boediono said.

Highlights of State Finance Bill

* Govt must submit macroeconomic assumptions of the following
year to the House no later than May of the sitting year (This
must be done in the next five years at the latest).

* Govt must propose a bill on state budgets for the following
year no later than August of the sitting year. (This must also
be done in the next five years at the latest).

* Regions must propose budgets for the following year to their
local representative council in the first week of October of the
sitting year.

* Central govt can provide loans and/or grants to regions, and
regions can do the same to the central govt.

* Such loans/grants can only be given with the House's approval.

* Regions can provide loans/grants to one another with local
representative council's approval.

* Central govt can provide or receive loans/grants to or from
foreign countries/institutions with the House's approval.

* Central govt can transfer loans/grants it receives to regions.

* Central govt can privatize state firms after the House's
approval.

* Regions can privatize regional state firms after the local
representative council's approval.

* Central govt can inject capital to private firms after the
House's approval.

* Govt submits reports of first-half implementation of budget in
sitting year no later than July.

* The President must deliver an accountability speech on the
status of state budget's implementation, audited by the BPK, six
months after the sitting year ends. (This will become effective
by 2006).

* Governors/Mayors/Regents must deliver similar speeches at
local legislatures six months after the sitting year ends.
(effective by 2006)