BPK set to audit eight banks over alleged misconduct

JAKARTA (JP): The Supreme Audit Agency (BPK) said on Wednesday it would start auditing later this month eight commercial banks receiving Bank Indonesia's emergency liquidity credits to investigate alleged malfeasance in the usage of funds.

BPK chairman Satrio Budihardjo "Billy" Joedono said some 60 banks obtained liquidity credit from the central bank, however, only eight were suspected of misusing the credit, mostly due to the large amount of funds they received.

Billy declined to mention the banks.

"The audit will include how the banks managed the funds as well as the process and mechanism of how the funds were channeled," Billy told reporters after handing over audit results of the use of the 1997/1998 budget to the House of Representatives.

Joedono said BPK would complete its audit by April, despite the fact that some of the eight banks were closed, and data might have been lost.

"We're expecting difficulties, including from banks trying to hinder the audit by erasing data," Joedono said.

BPK disclosed in December the damning results of its audit on Bank Indonesia, in which it alleged that the central bank had improperly channeled more than Rp 80 trillion (US$10.8 billion) of liquidity support to troubled banks during the economic crisis in 1997 and 1998.

The central bank channeled a total of Rp 164.5 trillion in liquidity credits to cash-strapped banks as part of the government's blanket guarantee program.

Billy said the BPK team of auditors would conduct a general audit on each of the banks' balance sheets and would afterwards conduct a due diligence on the use of the liquidity credits.

Joedono said BPK would likely involve officials and auditors of the Development Finance Comptroller (BPKP) in the team.

Meanwhile, in its report to the House, Billy said BPK found 1,295 cases of irregularities in the use of the 1997/1998 central government budget, provincial administration budgets and state firms' spending.

The irregularities could result in Rp 13.6 trillion in potential losses.

The agency found 318 cases of irregularities in the state budget, with potential losses of Rp 6.12 trillion and 630 cases of irregularities in provincial budgets with potential losses of Rp 2.55 trillion.

In state companies, BPK found 170 cases of irregularities with potential losses of Rp 3.99 trillion, and 117 cases in provincial administration-owned companies with potential losses of Rp 1.04 trillion.

"Some of these findings have yet to be resolved," Joedono said without further elaborating.

The irregularities the agency reported included 683 cases of violations against prevailing laws and regulations that resulted in potential losses of Rp 9.1 trillion.

BPK also found Rp 3.2 trillion in potential losses due to inefficiencies and ineffectiveness in managing state programs. (03)