City Council endorses new bylaw on reserve funds

JAKARTA (JP): The City Council endorsed on Thursday a new bylaw on the city's reserve funds amid councilors' anxiety over the poor performance of the city-owned Bank DKI, which has been entrusted to keep the funds.

The bylaw regulates the use of the reserve funds, amounting to Rp 400 billion (US$58.8 million), collected from half of the surplus of the previous city budget from the 1998/99 fiscal year.

The bylaw stipulates that the funds should be kept in time deposits in Bank DKI, or other state banks, and prohibits the banks to use the funds for risky deals such as foreign exchange transactions.

Councilor Maringan Pangaribuan of the Indonesian Democratic Party of Struggle (PDI Perjuangan) suggested the council should closely monitor the funds due to the bad performance of Bank DKI.

"It's a dilemma for us. We want to keep the funds, but we also want to improve the bank's performance," Maringan said on Thursday.

He said he expected that with the placement of the funds in Bank DKI, the council could closely monitor the bank.

Another councilor Amarullah Asbah from the Golkar Party questioned Bank DKI for taking an initiative to deposit the funds in other banks paying 15 percent interest, while Bank DKI itself only paid interest of 0.8 percent to the city.

"It's breached regulations," Amarullah said on Wednesday.

City Governor Sutiyoso said on Thursday that the bank's poor performance was due to the fact it has no marketing director, who was fired in May this year.

"We have asked Bank Indonesia to appoint a new marketing director, but the central bank has yet to decide on it," he said after a plenary meeting of the council which endorsed the bylaw.

Besides the missing marketing director, Sutiyoso said the absence of a supervisory body had also contributed to the bank's increasingly poor performance.

He said the city administration would hire independent professionals for the supervisory body. "They will only report to me about the bank."

On May 7, Sutiyoso dismissed the bank's marketing and credit director Siti Aisyah Margareth Rose Harahap after allegations that she used a fake university degree to get the job.

Earlier this year, the Jakarta Prosecutor's Office questioned the bank's president Maman Soelasman and director of general affairs Djunaedy Albaghdady in connection with their alleged involvement in a financial scandal at the bank.

Their status was never revoked by the Jakarta Prosecutor's Office and their case was not brought to the court.

The bank's bad debt, which had to be written off, reportedly amounted to more than Rp 300 billion. (jun)