Sat, 27 Sep 2003

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.