Economic ministers urged to resign
JAKARTA (JP): Indonesia's economic and financial ministers are under increasing pressure to resign for their implication in the high profile US$70 million Bank Bali scandal.
Popular opposition leader Amien Rais urged on Wednesday President B.J. Habibie to suspend Coordinating Minister for Economy, Finance and Industry Ginandjar Kartasasmita, Minister of Finance Minister Subianto, and chairman of the Indonesian Bank Restructuring Agency (IBRA) Glenn S. Yusuf.
Amien, who also chairs the advisory board of the Center for Banking Crisis (CBC), said the three senior economic officials should be held responsible for the Bank Bali affair and other suspected fraud which had caused the banking sector and the government to suffer trillions of rupiah in losses.
"The Bank Bali scandal is just the tip of the iceberg," he told a news conference.
Amien lambasted presidential decree No. 26/1998 of Jan. 26 1998 which stipulates the government blanket guarantee all bank deposits and claims -- except those to bank owners and directors -- as the main source of fraud in the banking industry.
The chairman of the National Mandate Party (PAN) said the policy was open to abuse by corrupt officials and bankers.
"We therefore demand that the presidential decree be revoked."
The government launched the blanket guarantee program early last year to prevent a complete collapse of the banking system in the wake of massive runs on banks as confidence in the sector plunged to its lowest point.
Questions over the possible abuse of the government blanket guarantee system emerged after the disclosure late last month of the alleged Rp 546 billion pillage of Bank Bali.
Banking law expert Pradjoto revealed to the media that two businessmen affiliated to the ruling Golkar Party had colluded with a deputy chairman of IBRA to force Bank Bali to pay a Rp 546 billion commission to help the bank recoup Rp 946 billion in its interbank claims on closed-down banks.
The commission was paid to a firm called PT Era Giat Prima (EGP), which is controlled by the two businessmen.
Pradjoto and most other analysts attacked the deal entirely as a rent-seeking activity and speculated that the money was earmarked for Golkar coffers to secure the election of President B.J. Habibie in November.
There have also been allegations that President B.J. Habibie was involved in the scandal.
Habibie declined on Wednesday to comment on the allegations.
"It is still being investigated by Bank Indonesia," he said when asked whether the allegation would affect his election chances.
Audit
IBRA announced on Wednesday that it was planning to appoint an international auditor to validate its internal audit result in its investigations of Bank Bali.
The announcement appeared to be a response to a demand issued on Tuesday by IBRA's Independent Review Committee that an international auditor be assigned to review the results of IBRA's investigations.
IBRA has confirmed the transfer of the Rp 546 billion funds out of Bank Bali, but the agency reiterated on Tuesday that the bank should not have used a third party to collect its interbank loans, which were covered by the government guarantee scheme.
The Bank Bali scandal has also highlighted the possible abuse of IBRA's huge economic power and assets by outsiders, including politicians of the ruling party.
IBRA deputy chairman Arwin Rasyid acknowledged in a seminar last week that many outsiders were seeking to profit from the almost Rp 600 trillion in state assets currently under the agency's management.
Separately, several prominent economists and former economic ministers voiced on Wednesday similar demands.
Economist Sri Mulyani of the University of Indonesia foresaw a worsening economic and banking crisis if economic ministers did not learn from past mistakes and instead easily acquiesced to political lobbying for unsound business practices.
"Ministers should resign when they can no longer say no to political pressure," she told a gathering.
Economist Sri Adiningsih of Gadjahmada University concurred, asserting "the technocrats have to possess integrity. They must be able to say no".
Pande Radja Silalahi, an economist at the Center for Strategic and International Studies (CSIS), asserted Bambang Subianto must resign in order to rebuild confidence in the country's financial and banking authority.
"Senior officials at IBRA must also step down because the public has lost trust in them," he said.
Indonesia's most senior economist and former minister Sumitro Djojohadikusumo agreed with the sentiments.
"That depends on their own conscience," he said, when asked by reporters whether the senior economic officials should step down.
"Those who do not remember the past are condemned to repeat past mistakes," Sumitro added. (rei/udi/prb)