IMF 'not softening' on Bank Bali scandal

JAKARTA (JP): Opposition politician Laksamana Sukardi dismissed reports on Friday that the International Monetary Fund (IMF) was softening its stance toward Indonesia over its demand for a satisfactory resolution of the Bank Bali scandal.

"It's not true. I have just come back from Washington after attending the (IMF and World Bank) annual meetings and I met with Hubert Neiss and Fischer. They're still insisting on a satisfactory resolution of the Bank Bali case," he told reporters.

Laksamana was referring to IMF Asia Pacific director Hubert Neiss and first deputy managing director Stanley Fischer.

Laksamana, a deputy chairman of the Indonesian Democratic Party of Struggle (PDI Perjuangan), made the remarks to reporters after the inauguration of newly appointed members of the House of Representatives (DPR) and People's Consultative Assembly (MPR).

IMF has withheld aid disbursement for Indonesia until the government reaches a satisfactory resolution of the Bank Bali scandal. IMF has also demanded a disclosure of the full PricewaterhouseCoopers (PwC) audit report on the scandal.

The government breached its promise to the IMF to disclose the full PwC audit report, which contains the flow of funds to personal bank accounts of influential people close to President B.J. Habibie on grounds that it would violate the country's banking secrecy code.

There have been allegations that the Bank Bali scandal involves Habibie's inner circle.

Laksamana is an economic adviser to PDI Perjuangan's chairwoman Megawati Soekarnoputri, Indonesia's most popular presidential candidate. Laksamana was appointed a House member representing the party.

Laksamana, one of the House members sworn in, added that the PDI Perjuangan faction would push the House to reopen the Bank Bali case if the scandal wasn't satisfactorily resolved.

Bank Indonesia deputy governor Miranda Goeltom was quoted by Dow Jones Newswires on Thursday as saying that the IMF has softened its stance toward Indonesia over the Bank Bali case.

Speaking after she attended bilateral meetings between Indonesian and IMF officials this week in Washington, Miranda said the fund now "understands" the central bank's argument that it can't release the full PwC audit report.

"I think they now have a better understanding of what our positions are at Bank Indonesia," Miranda said.

"I think they understand that there are some legal issues here," she said concerning the release of the PwC audit report.

"They also now think, like us, that publishing the full report, if it were true, that the report was not of good quality and cannot be positive," Miranda said.

Bank Indonesia Governor Sjahril Sabirin recently said that the PwC conclusions were speculative because the auditor didn't provide Bank Indonesia with the transcript of its interview with central bank officials to make clarifications in case of any misleading content.

The National Police have also said that they would only treat the PwC report as input because they questioned the auditor's methodology and considered the conclusions illogical.

The Bank Bali scandal centers around the transfer of some Rp 546 billion from the bank to PT Era Giat Prima (EGP) as a commission fee to help the bank recoup some Rp 904 billion in interbank loans on a closed-down bank.

The bank should have not used the service of EGP because the loans were actually guaranteed by the government.

The House has also issued a report of its own probe into the scandal which recommended Habibie to suspend certain high-ranking officials believed to have been either directly or indirectly involved in the scandal.

But the police also said it would only use the House findings as input.

The delay in aid disbursement from the IMF as well as from other international lenders, including the World Bank, due to the Bank Bali scandal may cause Indonesia to risk being deprived of some US$2.7 billion in loans from international donors by the end of this year, according to an analysis by the World Bank.

The analysis also said that by the end of the current fiscal year in March 2000, the total could rise to $4.7 billion and pose a major threat to the state budget. (rei)