Govt comptroller to audit liquidity support and BI
Govt comptroller to audit liquidity support and BI
JAKARTA (JP): The Development and Finance Comptroller (BPKP)
will start on Monday its investigative audit of the vast funds
provided by Bank Indonesia (BI) as liquidity support to local
recipient banks, according to BPKP chief Arie Suhendro.
Arie said on Thursday that the investigative audit would
involve 270 experienced auditors and was expected to be completed
in May.
"We'll start the audit on Monday," he said at a hearing
session with the House of Representatives Commission IX on
Banking and State Budget.
He said that the investigative audit into recipient banks was
demanded by Minister of Finance Bambang Sudibyo.
He said that since the House also ordered the State Audit
Agency (BPK) to investigate the recipient banks, BPKP would
coordinate with BPK to avoid overlapping.
The House has also ordered BPK to conduct an investigative
audit of BI over possible abuses in the channeling of the
liquidity support. BPK has said that it expected to complete its
investigative audit sometime in July.
The government via BI had provided some Rp 164.5 trillion
(US$22.5 billion) in emergency liquidity support between late
1997 and 1998 to help ailing banks stay afloat amid massive bank
runs.
Around Rp 100 trillion of the liquidity support went to five
banks including the nationalized Bank Central Asia (BCA) and Bank
Danamon, and the now defunct Bank BDNI and Bank Umum Nasional
(BUN), whose powerful tycoon owners are close to the former
authoritarian president Soeharto.
BPKP revealed in its recent general audit report that some Rp
50 trillion of the liquidity support was improperly channeled,
while BPK said in a similar report that the questionable amount
was around Rp 80 trillion.
There has been suspicion that the owners of the recipient
banks used the liquidity support to buy U.S. dollars, which in
part contributed to the deep plunge of the rupiah against the
dollar in 1998.
Former finance minister Fuad Bawazier on Wednesday blamed the
central bank for the abuse of the liquidity support.
Former central bank governor Soedradjad Djiwandono denied this
allegation, pointing out that the liquidity support program was a
policy agreed to together with the government to prevent the
complete breakdown of the country's banking system amid massive
bank runs.
The controversy surrounding the bank liquidity support program
has become the latest rift among the country's political elite
after last year's high profile Bank Bali scandal.
But many analysts believe that there has been abuse of the
liquidity support funds.
"I believe that the liquidity support has been abused. The
planned investigative audit is the right step," said legal
banking expert Pradjoto, who first revealed the Bank Bali scandal
in July 1999.
"Indonesia is one of the largest corrupt countries in the
world," said Sri Adiningsih, a noted economist at the Gadjah Mada
University.
Analysts also said that the mishandling of the liquidity
support was a "collective mistake" by the government and the
central bank.
"I think it is naive for the ex-finance ministers to blame
this problem solely on the central bank," said another Gadjah
Mada University economist, A. Tony Prasetiantono.
Meanwhile, legislator Paskah Suzetta, a member of the House
special investigation team, revealed that a classified letter
from the then president Soeharto (dated Dec. 27, 1997) ordering
the government and the central bank to provide the liquidity
support to all banks was leaked to the industry, prompting banks
to take advantage of the facility.
He said that the government previously limited the emergency
facility only to banks facing liquidity problems. (rei)