IBRA clearance team operation extended

Urip Hudiono, The Jakarta Post/Jakarta

The government has decided to once again extend the operation of the Indonesian Bank Restructuring Agency (IBRA) clearance team, but the move could hamper the Asset Management Company (PPA) in managing unsold assets from IBRA.

"We will extend the team's term as it turns out that it still has much work to do," Minister of Finance Yusuf Anwar told reporters on Thursday, without explaining the work or for how long the extension would be.

He only explained that although the team had wrapped up its assessment of assets formerly managed by IBRA, the results would still have to be reviewed by an internal audit team from the finance ministry.

"We can do it (the appraisal) as we have prepared many auditors from the Directorate General of Taxation," he said.

IBRA was set up in 1999 to manage unhealthy banks -- and all their assets -- that the government had to bail out during the 1997-1998 Asian financial crisis.

Following IBRA's official closure in February last year, a clearance team was established to wrap up unfinished matters, including the liquidation of closed down banks, the resolution of shareholders' obligations, audits of IBRA by public accountants and the Supreme Audit Agency (BPK) and the settlement of ongoing business transactions.

The clearance team was supposed to work for only six months but the government extended its term in August for another six months.

The PPA, meanwhile, was also set up to manage assets that IBRA had formerly managed. IBRA sold several of the assets to reimburse public money that the government had to use to bail out banks and help plug the state deficit.

Unsold assets were then divided into two categories: assets that were "free and clear" in terms of legality and those which were not.

The free and clear assets were managed by PPA. The total market value of these assets is Rp 10.8 trillion (US$1.18 billion), only 10 percent of their book value of Rp 108.5 trillion.

The non-free and clear assets' market value is Rp 4.3 trillion, far less than their book value of Rp 165.76 trillion. These assets will be managed by the clearance team before being handed over to the PPA, which will sell them and contribute the proceeds to the state budget.

Deputy chairman of the House of Representatives' financial affairs commission, Max Moein, questioned the ministry's internal team since it meant that the auditing of a government agency would be conducted by the government itself.

"The audit should be done by an independent agency, be it public auditors or the BPK," he said. "Maybe the government decided to use an internal team after deciding that the fee for public auditors was too high."

Max highlighted that the government's decision was in violation of regulations and hinted that the House would probably reject the audit results.

BPK head Anwar Nasution, meanwhile, said the audit agency would not be able to audit the assessment of the assets if the clearance team had yet to finish its work and if it was not requested by the government and approved by the House.

"How can we audit it if we have not received a final value for it?" he asked. "We will refuse to audit it if the assessment of the assets was not done according to proper regulations and procedures."