Government vows thorough resolution of bank scandal
JAKARTA (JP): The government is determined to thoroughly resolve the Bank Bali scandal, including taking legal action against wrongdoers as demanded by the International Monetary Fund (IMF), according to Coordinating Minister for Economy, Finance and Industry Kwik Kian Gie.
"The Attorney General will continue investigations against all wrongdoers," Kwik said on Thursday in a press statement. "For the wrongdoers legal action will be taken," he added.
Kwik explained that the government would take measures to prevent a similar scandal from reoccurring, including strengthening both the Indonesian Bank Restructuring Agency (IBRA) and banking supervision at Bank Indonesia and particularly strengthening the supervision of the government blanket guarantee program.
"In addition to that, the House of Representatives will also continue its probe into the Bank Bali scandal," he said.
The government has just released the long-awaited PricewaterhouseCoopers (PwC) audit report into the scandal, paving the way for a resumption of crucial international loans, including those from the IMF.
The loans were suspended in September after the previous administration of B.J. Habibie declined to publish the PwC report, raising skepticism that it could satisfactorily resolve the scandal.
Meanwhile, visiting IMF Asia-Pacific director Hubert Neiss reiterated on Thursday that the government must take firm legal action against the culprits in the scandal and take measures to prevent such scandals reoccurring as a precondition for the return of international confidence.
Neiss applauded the publication of the full PwC report, but warned that the above follow-up measures were also as crucial.
"I think the report is very comprehensive, but of course, as always, there are some loose ends in every report that need further inquiries," he told reporters following a meeting with Amien Rais, Speaker of the People's Consultative Assembly (MPR), the country's highest legislative body.
Neiss, who will leave Jakarta on Friday, also met with Speaker of the House of Representatives Akbar Tandjung afterwards.
The Bank Bali scandal revolves around the transfer of some Rp 546 billion (about US$80 million) in commission from the bank to private firm PT Era Giat Prima (EGP) for its service in helping the bank to recover some $120 million in interbank loans owed by closed down banks.
But since the loans were guaranteed by the government's blanket guarantee program, Bank Bali was not supposed to use the services of EGP.
PwC said that there are indications of "corruption" and "fraud" in the Bank Bali-EGP transaction.
The PwC report listed several "influential" names who had received a portion of funds possibly related to the Bank Bali commission money.
The report recommends further investigation of several senior government officials and former officials, including Arnold Baramuli, chief advisor to Habibie and former head of the Supreme Advisory Council (DPA), former state minister of the empowerment of state enterprises Tanri Abeng, former finance minister Bambang Subianto and several other Golkar Party key officials.
Many of the prominent names were not included in the list of those who had received a portion of the Bank Bali commission money, but PwC said: "Due to the evidence contained in this report, it is not possible for us to totally dismiss the potential involvement of such persons in the Bank Bali matter."
Neiss said that Amien agreed with the IMF standing that it would only disburse the loans after the government showed a commitment to resolve the scandal satisfactorily, including taking necessary legal action.
Neiss said that before the Fund disbursed the loans, the government must first complete a new letter of intent (LoI) which was to be submitted to the IMF board of directors as a basis for loan disbursement.
But Neiss said that before the Fund's expert team could come to Jakarta to start designing a new LoI with the government's economic team, the IMF board of directors must give a green light.
Neiss said that work on the new LoI would quickly start once the IMF board of directors gave the green light.
He expected that a new LoI could be completed in the middle of December, raising hopes that the Fund would disburse its loans late in the month or in early January.
The IMF is organizing a $43 billion bailout for Indonesia. The Fund itself has a commitment to provide some $12.3 billion, in which around $9.5 billion had been disbursed. The Fund will disburse another $460 million once it approves the new LoI.
Finance Minister Bambang Sudibyo has said that Indonesia would need some $1.2 billion in international loans from the IMF, World Bank, and the Asian Development Bank, to help finance the state budget in the remaining period of the current fiscal year ending March 2000. (rei)