BI's art collection under scrutiny

BI's art collection under scrutiny

Rendi A. Witular, The Jakarta Post, Jakarta

Is Bank Indonesia, the country's monetary authority,
interested in art?

According to the Supreme Audit Agency (BPK), the central bank
has an art collection that includes some pieces bought from
prestigious auction houses like Christie's and Sotheby's.

The problem is that the collection is not well managed and
many items may eventually become the property of the bank's
leaders, the BPK said.

BPK's latest report says the central bank spent Rp 6.28
billion (US$748,000) on art in 2002.

Of the funds, Rp 4.78 billion was spent on paintings, Rp 169
million on sculptures, Rp 59 million on earthenware jugs and Rp
1.26 billion was spent on paintings that have yet to arrive.

BPK deputy chairman Bambang Wahyudi said the purchase of
artwork was not only a waste of state money but could also cause
losses to the state, as under the internal ruling of the bank,
BI's leaders could eventually take over ownership of the artwork
at a low price.

The artwork was bought mostly to decorate the rooms of the
central bank's leaders.

"This is a problem because in this case BI has failed to
comply with efficiency rules. Besides, BI does not have a
regulation to ensure that the assets are well managed," said
Bambang to the press on Friday.

He also said that the agency was considering investigating the
matter.

The BPK report does not specify the art items bought by the
central bank, but it says the items were categorized as
"inventory" rather than "assets".

By categorizing them as inventory, the central bank treats
them similar to other inventory goods, such as cars and
furniture, the value of which decreases with time and can be
auctioned off to the bank's employees in the future at low
prices.

Under the internal rulings of the central bank, members of the
its board of governors have the right to buy the art items when
they retire at between 3.12 percent and 50 percent of the
original prices, depending on the board member's tenure.

The BPK insists that the art pieces should be classified as
assets rather than inventory as their value will increase over
time rather than decrease.

In its report, the BPK also voiced concern that the central
bank had failed to list some of the art items in its inventory,
which could lead to suspicions that the art has mysteriously been
lost.

The BPK has called BI's 2002 balance sheet "satisfactory, but
with some exceptions", particularly because of the alleged misuse
of Rp 20.9 trillion in state funds deposited in government
account number 502.

The 502 funds were originally allocated to cover the financial
obligations of closed banks as part of the government's blanket
guarantee program.

However, the central bank has insisted there are no
irregularities in the use of the 502 funds.

The government and the House of Representatives are in the
process of amending Law No. 23/1999 on the independence of the
central bank to give room for an independent supervisory board to
ensure BI's accountability.

However, the amendment faces a setback, as the government and
BI continue to disagree on the matter, forcing the House to
extend the timetable for the deliberations on bill, which have
been going on for three years.