House to amend central bank law
House to amend central bank law
JAKARTA (JP): The House of Representatives decided late on
Monday to amend the central bank law in an effort to remove the
legal obstacle over plans to replace Bank Indonesia Governor
Sjahril Sabirin.
House deputy speaker Tosari Widjaja said that House Commission
IX on state budget and finance would study the central bank law
and submit revisions to the consultative body to be debated and
finalized.
"The amendment will take place immediately ... There must be
an amendment because we feel that there are weaknesses in the
(current) central bank law," Tosari told reporters following a
closed-door meeting to discuss a letter from President
Abdurrahman Wahid calling for the amendment.
Tosari declined to say when the House would complete the
amendment process.
Tosari also said that the House could not yet make a decision
on the three candidates proposed by Abdurrahman.
He said that the House wanted the President to first clarify
whether the three candidates were proposed to become the central
bank governor or senior deputy governor.
He said that by law, the President could not propose a
replacement for Sjahril because he had not resigned.
According to the central bank law, approved by the House in
May 1999, the Bank Indonesia governor, senior deputy governor and
six members of the board of governors can not be replaced unless
they are proven to have committed a crime, are incapacitated or
voluntarily step down.
The law says that the President proposes the candidates for
the position of governor and senior deputy governor and the House
makes the final decision.
Many question the plan to revise the central bank law, saying
that it implies political intervention by the President to
replace the current Bank Indonesia Governor.
But Tosari dismissed suggestions that the revision was a
political interference in central bank affairs.
"The spirit of the amendment must maintain the independency of
Bank Indonesia," Tosari said.
Meanwhile, University of Gadjah Mada economist Arief Ramlan
Karseno supported the plans to amend the central bank law,
arguing that the current law granted Bank Indonesia too much
power.
Since assuming office last year, Abdurrahman has demanded a
change in the central bank leadership, particularly its governor.
But the central bank law prevents removal without proven
misconduct.
Sjahril, now under house arrest for alleged involvement in the
high profile Bank Bali scandal last year, has so far declined to
resign. Attempts by several top legislators on Sunday to convince
him to resign were fruitless, sources said.
Sjahril was reappointed last year for a five-year term.
Five members of Bank Indonesia board of governors including
senior deputy governor Anwar Nasution, and deputy governors
Miranda Gultom, Dono Iskandar, Burhanuddin Abdullah, and Achwan
tendered their resignations late on Friday during a closed-door
meeting with House Commission IX.
They will remain in office until successors have been
appointed by the House.
The resignations were made following calls by the President
that Bank Indonesia top management must be reshuffled in a bid to
create a credible central bank.
Bank Indonesia has been troubled for a year due to a dispute
with the government over the controversial emergency liquidity
support provided to ailing domestic banks.
The government, via the central bank, injected some Rp 144.5
trillion in emergency loans to troubled banks between September
1997 and January 1999 to help reimburse depositors's money at a
time of massive bank runs.
But the Supreme Audit Agency (BPK) revealed that Rp 138
trillion had been improperly disbursed by Bank Indonesia and Rp
80 trillion had been misused by recipient banks. The government
demanded Bank Indonesia pay part of the losses.
Bank Indonesia finally reached agreement with the government
that it could cover Rp 24.5 trillion, without having to be
recapitalized by the government. The central bank would have been
either recapitalized or liquidated had it been required to be
responsible for a larger portion of the losses.
As part of the deal, five members of the central bank board of
governors agreed to voluntarily step down.
Abdurrahman later proposed Anwar, and two other Bank Indonesia
senior officials, Siti Fajriah and Hartadi A. Sarwono, as
candidates for the new central bank governor and senior deputy
governor.
Separately, Attorney General Marzuki Darusman said Monday that
his office would summon several former and current Bank Indonesia
top executives for their roles in disbursing the emergency
liquidity facility.
"We will start with the person who knows best what has
happened," Marzuki told reporters.
He was referring to former Bank Indonesia Governor Soedradjad
Djiwandono. (rei/bkm/44)