IBRA urged to seek foreign auditors for Bank Bali scandal
JAKARTA (JP): Chairman of the International Review Committee (IRC) Mar'ie Muhammad urged the Indonesian Bank Restructuring Agency (IBRA) on Tuesday to appoint an international auditor to validate its internal audit result on the alleged Bank Bali scandal.
He said he ordered payment of all interbank claims on closed- down banks be temporarily suspended until the completion of an international audit to ensure that the "internal procedure at IBRA is working properly".
"I have sent a letter to the Chairman of IBRA regarding these points," Mar'ie told reporters.
Mar'ie, a former finance minister, said it was most imperative to uphold the credibility of IBRA because the agency was the center for restructuring of the country's banking sector.
He added that the agency controlled some 40 percent of the national assets.
"Maintaining the credibility of IBRA is very strategic," he asserted.
The five-member IRC is an independent committee, which was set up on June 30 under the guidance of the International Monetary Fund (IMF) and the Asian Development Bank (ADB) to provide advice to the government on the country's economic reform programs.
The Bank Bali scandal has put into question the credibility of IBRA, Indonesia's largest and most powerful economic entity, which was set up early last year to help the government restructure and recapitalize the ailing banking sector.
IBRA is in control of some Rp 600 trillion (US$85.7 billion) worth of various assets from closed and nationalized banks which will either be sold or restructured.
Banking law expert Pradjoto revealed the Bank Bali scandal late last month, accusing several businessmen affiliated to the ruling Golkar Party colluded with a deputy chairman of IBRA to force Bank Bali to provide some Rp 546 billion in fees to help the bank recoup some Rp 904 billion in interbank claims on closed-down banks.
IBRA confirmed the transaction but has yet to investigate whether its deputy chairman responsible for interbank claims settlements was involved.
Under the government blanket guarantee scheme launched early last year, all obligations of closed banks, including interbank claims, are guaranteed by IBRA, an agency under the Ministry of Finance.
Pradjoto also said other senior government officials were involved in the scandal, but he didn't reveal any names.
There have been increasing accusations that the huge fee was partly used to finance campaigning activities of the ruling Golkar Party, such as vote buying.
Bank analysts also believe there are other cases similar to the Bank Bali affair aimed at raising funds to secure the reelection of President B.J. Habibie in November's presidential election.
"But the Bank Bali affair must not cause a setback in the efforts to restructure the banking sector," Mar'ie said.
"Most of all, the Bank Bali case must not ruin the program," he added.
He said that the IRC supported IBRA's step to conduct an internal audit to probe the alleged scam.
"But to maintain the independency of the internal audit, IBRA must appoint an international auditor to validate the result," he said.
As part of the internal audit process, IBRA has suspended Pande Lubis, the deputy chairman allegedly involved in the scandal.
Mar'ie also urged the government to publicly disclose the result of the audit on the Bank Bali case.
"I think other IRC members will welcome this idea," he said.
Minister of Justice/ State Secretary Muladi said here on Tuesday that President B.J. Habibie had ordered Minister of Finance, the chairman of IBRA and the central bank governor to investigate the Bank Bali scam,
Muladi said the President strongly denied press reports that he was involved in the fraud.
Investigate Rudy
Separately, deputy chairman of the Indonesian Bar Association (Ikadin) Sudjono, urged on Tuesday the deputy attorney general for special crimes to immediately investigate Rudy Ramli, the former president of Bank Bali.
Sudjono told reporters that Bank Bali was a publicly listed company which involved the investments of a great number of people.
"Irregularities or fraud at this bank not only adversely affects the interest of the investing public, but also damages the credibility of the Jakarta Stock Exchange," Sudjono added.
He hailed the National Police for acting quickly to impose a travel ban on Rudy to safeguard his investigation and eventual prosecution.
Separately, noted economist Sri Mulyani said on Tuesday that Bank Bali scandal demonstrated the structural weakness of IBRA.
She said that the huge assets and power held by IBRA were vulnerable to abuse, including by people outside the agency.
"That's why the government has to set up a competing institution designed to check the agency," she said.
She said that the small team of the IRC was far from sufficient to oversee a huge organization as IBRA, with more than 1,000 staff members and some 40 banks in its hands.
"It is impossible for the IRC to supervise IBRA and review all of its policies," she added. (rei/udi/prb)