Disclose or suffer

Disclose or suffer

Indonesia's Supreme Court Justices, who are considering a
legal opinion on whether the full results of an independent audit
of the transactions relating to the Bank Bali scandal should be
disclosed, must take into account the devastating impact the
scandal has had on the country's economic reform program when
they make the decision.

The scandal, which involves the transfer of Rp 546 billion
(about US$80 million on the June rate) from Bank Bali to PT Era
Giat Prima (EGP), a company controlled by officials of President
B.J. Habibie's Golkar Party, hit at the heart of the reform
program -- bank restructuring. The case also impinged the
integrity of the Indonesian Bank Restructuring Agency, which
currently manages Rp 600 trillion ($75 billion) in state assets.

The scandal prompted the International Monetary Fund, the
World Bank, the Asian Development Bank and most other government
creditors to suspend further aid disbursements to the country,
because, as they stated, they no longer trusted the government.
At a time when the state budget relies on foreign aid for almost
35 percent of its total revenue, the suspension of aid amounting
to $2.7 billion to the end of this year or $4 billion to March is
terrifying.

No less damaging is the loss of foreign investor confidence in
the country because the Habibie administration, instead of
transparently and quickly resolving the high-profile, politically
charged case, resorted to all the tricks at its disposal to cover
up the affair which allegedly involved Habibie's close aides and
Golkar executives. Habibie and Satrio Billy Joedono, Chairman of
the Supreme Audit Agency, invoked numerous legal pretexts to bar
the public disclosure of the PricewaterhouseCoopers (PwC) audit,
despite the protestations of the IMF, the World Bank, the
previous House of Representatives and most legal consultants.

Habibie, speaking at a media conference on Friday evening,
even resorted to shooting the messenger, in this case PwC, which
discovered numerous indicators of corruption, fraud,
noncompliance, irregularities, undue preferential treatment,
concealment, bribery and misappropriation in the payments from
Bank Bali to EGP.

The President accused PwC of having exceeded its authority,
asserting that the company should have limited its work to
auditing the books, and not interrogating people linked to the
scandal. He quoted the National Police, which is now handling the
case, as complaining that PwC appeared to have usurped police
authority. But this point of argument appears hollow.

Nothing in the terms of reference in the agreement between PwC
and the Supreme Audit Agency, which hired the auditor, indicated
that the audit was simply meant to be a general audit. The
assignment was clearly defined as an investigative audit;
therefore the scope of the audit was not limited to checking the
financial records of the involved parties.

The terms of reference in the agreement with PwC were quite
broad, including: Reviewing the government guarantee scheme for
bank deposits and claims and the procedures for claim payments;
investigating whether the cession agreement between Bank Bali and
EGP influenced the payment of the bank's claim; tracing the flow
of payments made by EGP and the flow of return payments;
reviewing whether there were other transactions similar to the
Bank Bali cession agreement.

According to these terms of reference, interviews were
required and the process of tracing funds from the Bank Bali
payment necessitated checks on a number of bank accounts. But
when the investigative audit discovered about 150 transactions
involving the transfer of large sums of money from EGP executives
to senior government officials and companies affiliated with
Golkar leaders immediately after the Bank Bali payment to EGP,
the government cried foul. PwC was accused of exceeding its
authority. What all the arguments and charges boil down to is
none other than a deliberately orchestrated cover-up of high-
level corruption, which, by the way, is one of the underlying
causes of our current economic crisis.

If the Supreme Court justices are serious about enhancing law
enforcement, maintaining the commitment to combat corruption and
other abuses of power and helping regain domestic and
international investor confidence in our economy, they should
vote in favor of the full public disclosure of the PwC audit
report. Any other decision would only worsen the country's
economic crisis, triggering social and political stability at the
risk of national disintegration.