BPK to complete IBRA audit soon

Tony Hotland, The Jakarta Post, Jakarta

The Supreme Audit Agency (BPK) is set to complete its audit of the Indonesian Bank Restructuring Agency (IBRA) within a month, according to a top official.

Bambang Wahyudi, a BPK auditors, said on Friday that the BPK had been conducting the audit since last week.

The BPK is focussing the audit on the performance of IBRA in carrying out its mandate of restructuring the country's ailing banking sector.

"We'll look into matters such as whether those ailing banks have all recovered and whether they'll survive without IBRA in the future," said BPK chief Satrio B. Judono in a recent interview.

The government has decided to close down the agency on Feb. 27 of this year as planned.

IBRA was first established in 1998 during the administration of former president B.J Habibie to clean up the banking sector, which was saddled with huge debts following the 1998 financial crisis, and to restore ailing or insolvent banks to health.

The agency took over a number of ailing banks in the wake of the late 1990s financial crisis after the government injected a huge amount of bonds to bail out the banks. IBRA was mandated to restructure these banks.

IBRA was first chaired by Glenn Muhammad Yusuf. Three other chairman led the organization before the current chairman Syafruddin Temenggung took over. They were Cacuk Sudarijanto (January 2000 to November 2000), Edwin Gerungan (November 2000 to June 2001) and I Gede Putu Ary Suta (June 2001 to April 2002).

Although many of the "IBRA banks" have started making profits again last year, critics say that the agency has largely failed in carrying out its bank restructuring mandate as these profits came largely from interest revenue paid on the government bonds held by the banks, rather than from lending operations.