Fri, 19 Dec 2003

Evidence linked to misuse of BI funds found

Abdul Khalik, The Jakarta Post, Jakarta

Having questioned 21 witnesses in the last few days, National Police concluded on Thursday that trillions of rupiah in Account No. 502 had been misused during the fund disbursement process, both in Bank Indonesia (BI) and the Indonesian Bank Restructuring Agency (IBRA).

"We have questioned 13 witnesses from IBRA and eight from BI. We have come to an initial conclusion that irregularities occurred in the disbursement process. However, we haven't determined who was involved in that process," said National Police deputy spokesman Brig. Gen. Soenarko.

He said the police had calculated the amount of money stolen, but refused to disclose it because the total could change, as the investigation was still under way.

He added the police would concentrate on the flow of the funds. In doing so, the police would examine the procedure and mechanism of the account disbursement.

"After questioning the witnesses, we can investigate the procedure and mechanism of the account disbursement and the flow of the funds," said Soenarko.

He said that the investigation into the account was based on the report submitted to police on Sept. 12 and the audit report handed over to the police in November by the Supreme Audit Agency (BPK).

The police statement is in parallel with BPK's audit report, which announced in August that Rp 20.9 trillion (US$2.47 billion) in Account No. 502 had been allegedly misused by BI and IBRA.

Both BI and IBRA have denied the allegation, previously saying that they had followed all the procedures and regulations properly.

The audit report was a result of an investigation conducted by the agency at the request of the House of Representatives in 2001 upon learning that most of the funds (about Rp 53.8 trillion) in the account had been used.

The funds, which belong to the government and are deposited at BI, are used to cover the financial obligations of closed banks as part of the government's blanket guarantee program. The program was introduced in the late 1990s to help restore confidence in the ailing banking industry.

The audit request was made after the government had decided to set up a second account worth about Rp 40 trillion for the same purpose. The new account is known as Account No. 509.

The audit report said that of Rp 20.9 trillion allegedly abused, Rp 17.7 trillion had been used by BI with the remainder by IBRA.

Of the Rp 17.7 trillion in funds used by BI, Rp 14.45 trillion was allegedly taken by the bank from the account in May 2000. BI regarded the funds as an additional liquidity support loan (BLBI) on top of the Rp 144.5 trillion in funds injected by the bank under the first phase of the BLBI program.

The central bank injected hundreds of trillions of rupiah- worth of funds under the program to prevent the banking sector from collapsing after it was severely hit by the economic crisis in the late 1990s.