IBRA clearance team operation extended

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."