Government releases Bank Bali audit

Government releases Bank Bali audit

JAKARTA (JP): President Abdurrahman Wahid released on Tuesday
the full PricewaterhouseCoopers (PwC) audit into transactions in
the Bank Bali scandal, meeting a critical requirement for the
resumption of international loans to the government.

Coordinating Minister for the Economy, Finance and Industry
Kwik Kian Gie presented a copy of the audit to visiting
International Monetary Fund Asia Pacific director Hubert Neiss
during a news conference crowded by local and foreign reporters.

"I received an instruction from the President this morning to
publish the PwC report into Bank Bali," Kwik said, adding that
copies of the full audit would be available to the media on
Wednesday.

He said the President obtained a copy of the audit from the
National Police on Monday evening.

The audit discloses the transfers of funds from the Rp 546
billion 'booty' involved in the scandal to a number of
politically well-connected businesspeople, close aides of former
president B.J. Habibie and the Golkar party.

Kwik said publication of the PwC report enabled the government
to continue its cooperation with the IMF in resolving the
country's economic problems.

The IMF's loans, as well as support from the World Bank and
other donors, were halted in the middle of September after the
previous administration of Habibie declined to release the full
audit because of restrictions of the banking secrecy code.

"Everything is now settled. The social and political condition
has stabilized. The state budget is no longer a problem," Kwik
said.

House of Representatives Speaker Akbar Tandjung, who was
furnished with a copy of the audit last month, also announced on
Tuesday he would release the audit.

He said the decision was made after considering "the demands
of the people" and receiving an official request from the
President for the legislature to make the PwC audit available to
the public and the government.

Akbar previously ordered a House joint committee to study the
audit before deciding whether it should be released. The
committee was given until Dec. 15 to make a decision, a period
the government argued was too long.

Neiss welcomed the disclosure of the audit, which identifies
several influential figures and Habibie aides who allegedly were
involved in transactions in the Rp 546 billion payment.

The audit also recommends further investigation of Bank
Indonesia Governor Sjahril Sabirin, former finance minister
Bambang Subianto and former state minister of the empowerment of
state enterprises Tanri Abeng.

"I'm very happy that we can now put the Bank Bali case behind
us," Neiss said in the news conference.

Neiss, whose visit is scheduled to last until Friday, is
scheduled to meet Abdurrahman and Vice President Megawati
Soekarnoputri on Wednesday.

"We'll study the report carefully... and I'm sure that the
government will take necessary follow-up measures so that such a
case does not recur, and will take legal action," Neiss said.

"With the Bank Bali case behind us, the way is clear for
resuming loan (disbursement)." He said a technical team from the
IMF was expected to arrive in Jakarta next week to discuss the
best way to disburse the loans.

The scandal revolves around the transfer of the Rp 546 billion
commission from the bank to a private firm linked to senior
officials of the Golkar Party.

The commission was ostensibly provided as payment for services
rendered in recouping the equivalent of some $120 million in
interbank loans owed by closed banks. However, use of the
company's services was unnecessary because the loans were
guaranteed by the government.

There have been allegations that the funds were destined for
political purposes ahead of last month's presidential election.

Habibie's bid to retain power was severely undermined by the
scandal.

The IMF, the World Bank and the Asian Development Bank
suspended loan disbursement pending a satisfactory resolution of
the scandal, including the publication of the full audit. A
summary was released earlier.

The IMF is organizing a $43 billion bailout for Indonesia.
The fund has a commitment to provide $12.3 billion, of which some
$10 billion has been disbursed.

Kwik denied publication of audit was prompted by pressure from
the IMF.

"It's the determination of the government of Abdurrahman Wahid
to be transparent."

Kwik said the country was not in urgent need of the IMF's
funds and Neiss acknowledged "(Indonesia) is in no emergency to
rush (for IMF money)".

He said the government would have to sign a new letter of
intent which would be studied by the IMF's board of directors as
the basis for new loan disbursement.

Kwik said finalization of the new letter of intent would be
completed in the middle of December with a draft ready by Nov.
25.

He said the IMF team would review the fund-sponsored economic
programs next week and would meet with pertinent ministers in the
following week.

Minister of Finance Bambang Sudibyo said on Tuesday he was
optimistic about the outlook for the state budget in the current
fiscal year ending in March 31, 2000, on the back of better oil
prices and strong tax revenue.

Speaking to reporters following a meeting with other economic
ministers, Bambang forecast that the budget deficit in the fiscal
year would be about 4 percent of gross domestic product, lower
than the initial estimate of 6.87 percent.

He also said the state budget would need about US$1.2 billion
in multilateral loans in the second half of the fiscal year.

The figure is much lower than the $4.7 billion pledged by
international creditors until March.

Kwik denied media reports that he disagreed with Bambang over
the condition of the state budget.

He said his earlier comment that the budget was in a deficit
referred to the full year through March 31, 2000, while Bambang's
comment covered only the period from April to September.
(rei/02/prb)