IBRA did job, but success unclear, says audit agency

IBRA did job, but success unclear, says audit agency

Tony Hotland, Jakarta

The Supreme Audit Agency (BPK) has concluded that the
dissolved Indonesian Bank Restructuring Agency (IBRA) performed
its duty of restructuring the majority of troubled banks, but
refused to judge its performance.

The BPK's head Satrio "Billy" Joedono said the agency was not
in a position to decide if IBRA had successfully done its job,
and would leave it to the House of Representatives to make a
judgment.

He said the final audit results of the agency's performance --
which was being finalized by the BPK to make sure all
terminologies were "readable" -- would be submitted to the House
within the next two weeks.

"Based on our audit, IBRA managed to restructure most of the
banks. However, that's not an automatic indication that IBRA
succeeded in carrying out its task," he said.

Billy refused to disclose the names or the exact number of the
banks the agency had managed to restructure.

He explained, however, the banks taken over by IBRA were of
different sizes and had suffered various degrees of damage. The
high number of banks which the agency managed to restructure did
not mean it had done its job successfully.

"Maybe, it managed to restructure small banks, but failed as
far as big banks were concerned," he said.

Under the Office of State Ministry for State Enterprises, IBRA
was set up in 1998 amid the height of financial crisis that left
the country's banking system in complete disarray. It was tasked
to restructure fractured banks, sell their assets at a maximum
recovery rate and litigate bank owners who had failed to repay
their debt to the government.

Analysts have criticized its performance, saying that those
banks are yet to prove their ability to survive. They also point
out weak internal control mechanisms and the current low lending
rates to the corporate sector as indications that the country's
banks have not really recovered.

Until its closure in February, IBRA -- which took over Rp 650
trillion (US$75 billion) worth of assets from troubled banks and
their former owners -- had only raised around Rp 168.2 trillion,
or a mere 28 percent recovery rate.

A BPK auditor, Bambang Wahyudi, previously said that the BPK
was using 12 indicators in auditing IBRA's performance in
restructuring banks, the main three of which were the banks'
capital adequacy ratios (CAR), non-performing loans (NPL), and
their intermediary roles.

The newly completed BPK audit reviewed only the performance of
IBRA in carrying out its chief task to restructure the banks. The
BPK plans to conduct audits on IBRA's other tasks.

To audit IBRA's other tasks, Billy also said that the BPK
needed to study IBRA's accountability report to the Ministry of
Finance. The ministry had promised to provide a copy of the
report by April 30, but the BPK is yet to receive it.