Boediono dashes hopes for justice in huge BI fraud case
Dadan Wijaksana, The Jakarta Post, Jakarta
Finance Minister Boediono stressed on Wednesday that the plan to appoint an independent consultant to audit the controversial Bank Indonesia (BI) emergency loan debacle was not meant as a new investigation measure into the alleged massive loan abuse.
Boediono said that the independent audit would be more focused to calculate the burden the government and the central bank each must bear.
"The aim of the appointment (of the independent auditor) is more to determine the proportion of burden sharing between the government and the central bank," he said on Wednesday, adding that the government preferred a foreign auditor for the job.
Boediono's statement seemed to dash earlier hopes for the resumption of a thorough independent investigation into what might be the country's largest corruption case ever.
As reported earlier, a BI senior official indicated that the International Monetary Fund (IMF) and the government had agreed to appoint an independent consultant to investigate the suspected misuse of the central bank's emergency liquidity support loan program worth a staggering Rp 144.5 trillion (some US$14 billion) disbursed during the peak of the 1997 regional financial crisis.
The move had sparked a glimmer of hope that the government would get serious about a new investigation, after earlier audits by the government's Supreme Audit Agency (BPK) and a probe by a special team of the House of Representatives failed to deliver justice.
According to last year's BPK audit report, some Rp 138.4 trillion of the liquidity support program had been misused. While the loans were only intended to be channeled to banks facing massive cash losses, some banks instead used the money to speculate on currency, acquire fixed assets or rechannel them into the interbank market.
The BPK also put the blame for the losses on the central bank.
Of the Rp 138 trillion in misused loans, some Rp 100 trillion went to a small number of banks owned by powerful businessmen believed to be very close to former president Soeharto.
BPK also said that none of the banks had paid back the money, leaving taxpayers to bear the cost.
The BPK report of fund manipulation, prompted the government to decide not to cover the emergency loans, pushing BI to the brink of bankruptcy.
It was only after intense lobbying by several members of the BI board of governors who threatened to resign, that the government finally agreed to ease the central bank burden by requiring them to cover only Rp 24.5 trillion of the loans, the maximum limit BI could bear to avoid bankruptcy.
The government issued bonds to cover the loan, which means that taxpayers would shoulder the cost.
However, none of those responsible for the huge losses were put behind bars.
Top officials at BI have denied responsibility, arguing that the loan program aimed at preventing a collapse in the domestic banking system was not BI policy, but was ordered by the last Cabinet of the Soeharto regime. Most of the loans abused were dispersed before BI became an independent central bank in May 1999.
Among the top officials involved in the decision-making process at the time included former chief economics minister Ginandjar Kartasasmita and former BI governor Soedradjat Djiwandono.
Meanwhile, economist Pande Radja Silalahi called for a clear job description for the would-be auditor so that they can carry out their duties properly.
"It should be clarified as to what will be their main tasks, because if they fail to come up with an expected solution, it will eventually harm the government's image," he told The Jakarta Post.
But, he also warned the people not to expect too much from the move, saying: "One thing we must keep in mind is the IMF itself should be considered one of the actors in this case, as the loans were disbursed while BI was under the Fund's direct supervision."
Meanwhile, Bustanul Arifin of the Institute for Development of Economics and Finance (Indef) said that the limited terms of reference given to any consultant was expected.
"I think the main purpose of an independent consultant, apart from the calculation matters, is to find out whether the emergency loans actually coincided with efforts to improve the performance of the country's banking sector," Bustanul told the Post.
"If the auditor is tasked to bring those responsible for the abused loans to justice, it would be way out of IMF's jurisdiction."
Launching a new investigation on the possible misuse of the loans, Bustanul added, would undermine the BPK as a credible agency, as it had already revealed its findings last year.