Economic ministers urged to resign

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)