IMF 'not softening' on Bank Bali scandal

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)