BPK urged to clarify its audit of Account 502

Tony Hotland, The Jakarta Post, Jakarta

Experts have urged the Supreme Audit Agency (BPK) to properly classify and explain the results of its audit on Bank Indonesia Account 502 so as to facilitate the police in their investigations.

Center for Information and Development Studies chairman Umar Juoro said that this was essential to prevent the use of the "wrong procedures" argument to get corrupt officials off the hook.

"I would suggest that the BPK clearly explains which transactions are in violation of the procedures and which are in violation of the law," said Umar during a discussion on the latest developments in the Account 502 scandal here on Saturday.

Account No. 502 was used for the depositing of funds to finance the government's blanket guarantee program for time deposits and other liabilities of closed-down banks. The program was instituted to stave off panic in domestic banking industry after the government closed down a number of banks in the wake of the late 1990s financial crisis.

But according to a BPK audit, some Rp 20.9 trillion (US$2.4 billion) of the funds were misused by Bank Indonesia and the Indonesian Bank Restructuring Agency, a government institution set up in 1998 to implement the blanket guarantee program. The agency will be closed down in February this year.

So far, former top IBRA officials and a former Bank Indonesia governor have been named suspects in the case.

To date, only a few of the financial regulators and bankers suspected of committing crimes during the late 1990s banking crisis have been punished.

The central bank and IBRA have denied the BPK charges.

There are fears that the officials involved might argue that the alleged misuse of the funds was actually not a crime but only the result of the application of mistaken procedures during the disbursement of the funds.

Umar explained that this problem arose due to the fact that many government regulations were excessively vague, thus creating loopholes that could be taken advantage of by corrupt officials.

Umar's statement was supported by House of Representatives' member Rizal Djalil, who was upset by the sheer audacity of some of the violations.

"For example, how come IBRA disbursed funds to third parties with no proof of who they were? Many of them didn't have ID cards, account books, or proof of their financial status. That's definitely wrong," he said, referring to some of the findings of the BPK audit.

Rizal is a deputy at the House Commission on financial and banking affairs.

Meanwhile, BPK senior auditor Bambang Wahyudi said through a telephone interview that most of the misused funds was a result of administrative faults.

He said that the agency was ready to help the police in the investigation if asked.