IBRA to deal with interbank claims: BI
JAKARTA (JP): Bank Indonesia Governor Sjahril Sabirin said on Monday the central bank would no longer be involved in the process of verifying interbank claims guaranteed by the government.
He said the verification would be the sole responsibility of the Indonesian Bank Restructuring Agency (IBRA).
"Based on our discussions with IBRA, we have temporarily agreed that it (the verification) will be the sole responsibility of IBRA," Sjahril told reporters after a meeting with House of Representatives leaders.
Sjahril said that IBRA could ask a third party to help in the verification process, depending on the capacity of the agency's human resources.
The government launched a blanket guarantee program early last year whereby all obligations of closed down banks, including deposits and interbank claims, were fully guaranteed by the government.
Bank Indonesia and IBRA were given the authority to verify claims on closed down banks.
The blanket guarantee program was launched in a bid to prevent a complete breakdown of the country's banking system as confidence in the industry plunged to its lowest point last year.
But the outbreak of the high profile Bank Bali scandal in the middle of this year showed that the blanket guarantee program was prone to abuse by both the country's banking authorities and politicians.
The Bank Bali scandal centers on the transfer of some Rp 546 billion from the bank to PT Era Giat Prima (EGP) as a commission for the private firm to help the bank in recouping some Rp 904 billion in interbank claims on a closed down bank.
The government has insisted that Bank Bali didn't have to use the services of EGP because the claims were guaranteed by IBRA, a unit of the finance ministry.
The PricewaterhouseCoopers audit on the scandal concluded that there were indications of "fraud" and "corruption" in the Bank Bali-EGP transaction.
The report, released to the public recently, named several top banking authorities, including IBRA and Bank Indonesia officials and influential businessmen allegedly involved in the scandal.
The report also found irregularities in the processing of Bank Bali's inter-bank claims by IBRA and Bank Indonesia and recommended further investigations of Sjahril and former finance minister Bambang Subianto.
IBRA has suspended payment of interbank claims on closed down bank following the Bank Bali scandal, pending the completion of an independent audit by Ernst & Young on the agency's process of settling inter-bank claims owed by closed banks.
The international auditor is expected to shortly complete its audit on some Rp 15 trillion in interbank claims on closed down banks.
Legislators and several economists have called on the government to exclude interbank claims from the government blanket guarantee program due to the possible abuse.
Assets shrinking
Meanwhile, Bank Indonesia deputy governor Subarjo Joyosumarto dismissed on Monday media reports that some of the assets of the 16 banks closed down by the government in November 1997 had "disappeared."
Speaking to reporters after accompanying Sjahril to the meeting with the House leaders, Subarjo said that the liquidation team was still working on how to recover the assets of the closed banks, estimated at Rp 13.8 trillion.
"It's not true. I don't know where the news came from," he said, dismissing reports that the assets had "evaporated" and Bank Indonesia should be responsible.
Subarjo said that so far the liquidation team had recovered some Rp 2.8 trillion from the sale of assets.
He said that some Rp 11.5 trillion of the assets were in the form of loans.
He admitted that recovering the loans was difficult because selling the collateral amid the current weak economic condition would only get fire-sale prices.
"Until now, the liquidation team has reported monthly," Subarjo added. (rei)