Ex-finance ministers blame central bank for loan scam
Ex-finance ministers blame central bank for loan scam
JAKARTA (JP): Three former finance ministers blamed on
Wednesday the central bank for the alleged mishandling of the
controversial multibillion dollar liquidity support provided to
ailing banks between 1997 and 1998.
Former finance minister Fuad Bawazier said that it was Bank
Indonesia which had been "too creative" and misinterpreted the
government bank liquidity support policy, which caused the
liquidity support funds to reach a staggering amount.
Fuad pointed out that the government had never instructed the
central bank to prevent bank closures by continuously providing
liquidity support to ailing banks.
"There are banking stipulations which were not followed and
implemented by Bank Indonesia," he told reporters following a
closed-door meeting between the House of Representatives special
investigation team and the three former finance ministers
including Mar'ie Muhammad and Bambang Subianto.
Fuad didn't provide details.
But legislator Didik Supriyanto who attended the meeting said
that the former finance ministers had recommended the central
bank provide the liquidity support only to healthier banks facing
bank runs, while insolvent banks should have been merged,
nationalized or liquidated.
"Bank Indonesia misinterpreted the policy, and it's possible
that there had been a maneuver by Bank Indonesia so that certain
banks could receive the liquidity support," Didik said.
He said that the former finance ministers called on an
immediate investigative audit into the case.
The bank liquidity support policy was launched in September
1997 amid plunging confidence in the country's banking system.
The amount of the liquidity support channeled via Bank Indonesia
has since inflated to Rp 164.5 trillion (US$23 billion) as of
January 1999.
A general audit report by the Supreme Audit Agency (BPK)
revealed that around Rp 80 trillion of the liquidity support may
not have been properly channeled by Bank Indonesia.
The House has recently asked BPK to conduct an investigative
audit into the case to clarify the status of part of the
liquidity support funds.
BPK has said that it would complete the audit in three to six
months.
Separately, former Bank Indonesia governor Soedradjad
Djiwandono rejected the allegations made by the former finance
ministers that the central bank misinterpreted the government
policy.
Speaking in an interview with a private TV station, Soedradjad
said that the central bank had to provide the liquidity support
to protect the country's banking system from a complete
breakdown.
Indonesia's banks suffered massive runs in 1998, particularly
after the government shut down 16 banks in November 1997, and in
the wake of the downfall of the former authoritarian president
Soeharto.
The accusations against the former finance ministers is the
latest rift among the country's political elite in relation to
the large transfer of government funds to private banks in such a
short period.
Among the largest recipients of the liquidity support were
banks owned by businessmen closely linked to Soeharto. Around Rp
100 trillion were injected into banks owned by Sudono Salim (Bank
BCA), Sjamsul Nursalim (Bank BDNI), Usman Admadjaja (Bank
Danamon), Mohamad Bob Hasan and the Ongko family (Bank BUN).
There have also been allegations that the powerful bank owners
misused the liquidity support for activities including currency
speculation which helped send the rupiah to its lowest level of
Rp 17,000 per U.S. dollar in 1998. (rei/03)