IMF still insists Indonesia disclose PwC report

IMF still insists Indonesia disclose PwC report

JAKARTA (JP): The International Monetary Fund can understand
the legal obstacles Indonesia is facing in fully disclosing the
PricewaterhouseCoopers (PwC) audit report on the Bank Bali
scandal, according to Chairman of the National Development
Planning Board (Bappenas) Boediono.

But Boediono said on Tuesday the IMF still insisted that the
government meet its promise to disclose the full PwC audit report
and urged the government to seek the necessary legal basis for
allowing full disclosure.

"The IMF knows of the legal problems... that we have to seek
a legal basis so that it (PwC audit) can be released," he told
reporters.

"We have to follow the legal procedure, we can't violate the
law, and they (the IMF) can understand our stance," he added.

Boediono attended the IMF-World Bank annual meeting in
Washington last week.

The government had earlier allowed PwC to investigate the Bank
Bali scandal following pressure from the IMF.

PwC completed the investigation report on Sept. 6, but the
Supreme Audit Agency (BPK) which provided the permit for PwC to
enter the central bank in the investigation process declined to
disclose the full report, citing the banking secrecy code and BPK
rulings.

BPK submitted the full report only to the police.

The full report contains details of the flow of funds from
Bank Bali to the personal bank accounts of politically
influential people and close associates of President B.J.
Habibie.

According to the country's banking secrecy code, only the
police can have access to audit reports which reveal personal
bank account details.

BPK chief Satrio B. Yudono has argued that a violation of the
ruling would cause both BPK and PwC to risk a fine of up to US$25
million and a four-year jail term.

Satrio added that a BPK audit report on a crime must only be
submitted to the police, the attorney general office or the tax
office in case of tax fraud.

But critics attacked the argument simply as a legal pretext to
protect some influential names close to President B.J. Habibie
who are believed to be involved in the scandal.

The Bank Bali scam revolves around the "illegal" transfer of
some US$80 million from the bank to a private firm controlled by
a deputy treasurer of the Golkar Party. There have been
allegations that Habibie's inner circle used the firm to help
raise funds for Habibie's election campaign later this month.

The IMF and the World Bank have suspended aid disbursement to
the country because the government broke its promise by not
disclosing the full PwC report.

The IMF and the World Bank have sent a letter to the
government to express their dissatisfaction over the failure to
disclose the PwC audit.

"We remain greatly concerned about what seems to be a
continued unwillingness to publicly release the PwC long-form
report. Without obtaining a complete copy of the long-form
report, our institutions will not have a basis to assess whether
the steps taken by the authorities are sufficient to fully
address the Bank Bali matter," the IMF and the Bank said in a
joint letter to the government.

Boediono said that resumption of the IMF aid hinges on a
satisfactory resolution of the Bank Bali scandal, including the
full PwC audit report.

But Boediono said that despite the IMF and the World Bank's
dissatisfaction, the two multilateral agencies agreed in
Washington last week to send a technical team to update the
country's economic program.

"This is a very positive step," he said.

He said that the update would include talks with government
officials, economists and leaders of major political parties.

He added that the end-result of the update would be used as a
basis for the next official review meeting between the upcoming
new government and the Fund.

"They will come here next week, but we'll not issue a new
letter of intent," Boediono said, adding that the new letter of
intent would be made by the country's new government.

"So (IMF) aid disbursement will be made after a new government
has been formed," Boediono added.

The approval of the new letter of intent by the IMF executive
board is normally followed by a disbursement in aid.

The IMF is committed to provide some $12.1 billion in aid for
Indonesia as part of the $43 billion in bailout money the Fund
organized for the country. Indonesia was supposed to receive
another tranche of $460 million this month. The Fund has so far
disbursed more than $10 billion. (rei)