IBRA faces increasing calls for investigative audit

IBRA faces increasing calls for investigative audit

The Jakarta Post, Jakarta

As the tasks of the Indonesian Bank Restructuring Agency
(IBRA) near completion, debate intensifies on whether an
investigative audit on the agency is needed to check for possible
irregularities during its five-year existence.

Such an audit, which would be different from the annual audits
IBRA has been holding so far, would cover all IBRA transactions
and working processes from the moment the agency was set up in
1998 to its planned closure on Feb. 27.

"I think it's a must. An investigative audit will show whether
all the processes, be they restructuring assets, asset sales and
others, have been optimum," Dradjad Wibowo, an economist at the
Institute for the Development of Economics and Finance (Indef),
told The Jakarta Post on Sunday.

The audit, he added, could then investigate suspicions of
widespread improper practices.

Dradjad was echoing a chorus of similar calls saying it was
the best way to ensure that accountability was rendered. Some
legislators have also voiced the same opinion, urging the Supreme
Audit Agency (BPK) to act as the auditor.

Since its establishment, IBRA -- which controls billions of
dollars worth of assets taken from troubled banks and indebted
bank owners -- has faced interference from powerful politicians
and businessmen, which critics say is the main reason for alleged
bad business practices in the agency.

Politicians, who are in need of cash and see the agency as a
potential cash cow, have reportedly been vying to influence the
agency. The fact that the incumbent head, Syafruddin Temenggung,
is the agency's seventh boss since its establishment would seem
to bear this out.

It is this that has prompted calls for the investigative
audit.

Syafruddin has said that the agency had no problems with the
demand.

Speaking during a hearing with the House of Representatives'
Commission IX on financial affairs last week, Syafruddin said he
would not mind if an independent auditor was appointed to conduct
the audit.

However, Raden Pardede of the Danareksa Research Institute was
against such an idea. "I don't think it's necessary. More work,
more committees, this will only create an endless cycle of work.
IBRA is being audited each year, why don't we use that as a
guideline.

"Then, if there are cases that need to be clarified, then
maybe verification will be needed, but that's it. It does not
have to be a full audit all the way from the start," Raden told
the Post.

Raden also urged that similar verification be conducted on the
agency's unsold assets to avoid possible disputes in the future
involving the new executive bodies that it is planned to set up
after IBRA's winding up.

IBRA is mandated to restructure and sell the assets in the
form of non-performing bank loans and fixed assets taken from
troubled banks and indebted former bank owners, to raise cash to
help finance the budget, which is heavily weighed down by the
huge cost of bailing out troubled banks.

Among the much-criticized aspects of IBRA works is the slow
progress in forcing former bank owners repay their debts (most of
them have still not repaid their debts after years of
negotiation), and the fact that many of the loan assets that have
been sold are suspected to have been repurchased by the debtors
at huge discounts.

The agency has posted a recovery rate of 28 percent for the
assets under its control, which is higher than the recovery rates
of similar agencies in countries such as China (8 percent),
Thailand and South Korea (about 25 percent).