House asks BPK to audit bank guarantee fund
JAKARTA (JP): The House of Representatives (DPR) will ask the Supreme Audit Agency (BPK) to run an audit of the use of the bank blanket guarantee fund amid allegations of misuse, a top legislator has said.
Head of House Commission IX for financial and development affairs Benny Pasaribu said on Wednesday that the audit should start immediately next week.
"We will send a letter to BPK for an audit on the use of the account by next week at the latest," he said, referring to the government special account in Bank Indonesia, called account number 502. The bank guarantee fund is kept in this account.
Benny was speaking on the sidelines of a session between Minister of Finance Boediono and House Commission IX.
Benny said that the audit should be finished in three months time.
Under the blanket guarantee program, which was launched in early 1998, the government covers all obligations of closed banks, including depositors' money, in a bid to avoid mass panic when the government needs to close a bank.
In November 1997, the closure of 16 private banks created widespread panic among depositors due to the absence of the blanket guarantee scheme.
Financing for the scheme was taken from government bonds issued in June 1999, worth Rp 53.7 trillion (about US$6 billion), and kept in Bank Indonesia account number 502.000.002.
The account can only be accessed by either Bank Indonesia or the Indonesian Bank Restructuring Agency (IBRA) and covers all obligations of closed banks.
The government had reported that between Jan. 26, 1998 and Aug. 25, 2001, Rp 25.75 trillion was used by IBRA and Rp 23.6 trillion was used by BI, while the balance was Rp 4.39 trillion.
However, the details of the cash flow have not been verified, and there have been suspicions that the funds were allegedly misused.
Anggito Abimanyu, an expert staff member of the finance minister, said that the audits conducted for account 502 had so far been general, and a part of the periodic audit on Bank Indonesia and IBRA.
"The audits usually only specify what the funds were for, or the outflow, but not who it was given to," he said on the sidelines of a hearing with the House.
He said that the audit by BPK would disclose in detail how the money was disbursed and used.
"BPK can only do an audit if it is asked by the DPR," Anggito said.
Benny said that the House did not mind if it was accused of being lax in the investigation of the BI account.
"If you believe that it was a mistake (not to investigate the account earlier) then by all means print it, but we don't think it was wrong," he said, saying that the House could not always ask BPK for an audit.
"We ask BPK for an audit only if there is a problem," Benny said.
The House demanded an audit on the account as a condition for its approval of the issuance of an extra Rp 40 trillion in bonds to replenish financing for the blanket guarantee fund.
The new bond issue is part of the latest government agreement with the International Monetary Fund.
The new government bonds will be placed in a separate account and used if there are any more bank closures.
Other conditions set by the House include the redemption of past government bonds from recapitalized banks through an asset bond swap, and to get an asset guarantee from closed banks at approximately the same value as the government's guarantee.(tnt)