BPK plans a complete audit of 'rich' IBRA

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)