BPK plans a complete audit of 'rich' IBRA

JAKARTA (JP): The Supreme Audit Agency (BPK) plans to soon begin a comprehensive audit of the Indonesian Bank Restructuring Agency (IBRA), according to BPK senior official Bambang Wahyudi.

Bambang said over the weekend that the auditing would take about two fiscal years due to the massive work involved.

"The comprehensive audit is our initiative. IBRA must be audited by BPK. It will start in 2001 and will take a long period," he told reporters at the BPK Headquarters.

IBRA controls banking assets, estimated at Rp 600 trillion (US$63.15 billion), transferred from closed and recapitalized banks, and indebted former bank owners.

With such a huge asset, the agency is now regarded as the country's richest institution, thus vulnerable to corruption and exploitation by politicians, as well as well-connected businessmen.

IBRA, a unit of the finance ministry, is mandated to restructure and sell the assets to raise cash to help finance the state budget deficit which is heavily burdened by the huge cost of the government bank restructuring and recapitalization program. The agency must complete this task by 2004.

A financial audit was conducted on IBRA in June last year by a private accounting firm but the latter issued a disclaimer because it could not obtain sufficient information from IBRA.

In a meeting with IBRA last week, legislators called on the agency to cooperate with BPK in providing information to allow the auditors to do their job.

Bambang said the comprehensive audit would start immediately after BPK completed the investigative audit of IBRA latter this month

The House Commission IX for state budget and finance instructed BPK late last year to audit the assets, surrendered to IBRA, by former bank owners to repay their debts to the government.

"We expect to complete the investigative audit by the end of February," Bambang said, adding that BPK has placed some 88 of its auditors in IBRA since November.

Bambang added that so far IBRA had been cooperative in providing the necessary information, but he admitted the process had been slow because there were too many documents and data to be looked into.

The former bank owners owe, in total, about Rp 144.5 trillion in bank liquidity support provided by the government via Bank Indonesia between 1998 and 1999 when the country's financial and banking crisis deepened.

There have been concerns that the value of the assets surrendered by the former bank owners is lower then what has been declared.

IBRA has demanded some former bank owners to add more assets and provide a personal guarantee, in case the assets pledged earlier are deemed insufficient to cover their debts.

The bank liquidity support facility has become controversial following the revelation by BPK that some Rp 138 trillion of the loan facility has been misused by the recipient banks.

BPK said the facility was supposed to be given to banks to pay depositors amid massive bank runs at the time, but many bank owners used the funds for currency speculation and to finance their affiliated companies. The agency has said this was partly due to the weak supervision of Bank Indonesia.

The government had initially demanded that the central bank cover the loss, but Bank Indonesia rejected it, arguing that the liquidity facility was a Cabinet decision made in late 1997, and that the government should cover the loan as planned because it had received a massive amount of assets from indebted banks.

Finally, it was agreed that Bank Indonesia had only to cover Rp 24.5 trillion of the loan facility, while the government would cover the rest. The government has issued bonds to Bank Indonesia for this purpose.(rei)