Fri, 08 Dec 2000

New law 'will fire' BI board of governors

JAKARTA (JP): Coordinating Minister for the Economy Rizal Ramli said on Thursday that the incumbent board of governors of Bank Indonesia should be suspended after the new central bank law becomes effective.

Rizal said that this would allow the House of Representatives to select replacement board members based on the new central bank law.

"The current board of governors must step down once the new central bank law is effective," Rizal asserted, implying that Governor Sjahril Sabirin who resumed his job on Wednesday would be replaced sometime in January.

The government has proposed a bill to amend the central bank law, which was enacted in May 1999.

The amendment includes allowing the House to dismiss board members who have failed to perform well or who have not been active in office for at least three consecutive months.

Under the current law, the board members cannot be dismissed unless they have been proven to have committed a crime, become incapacitated or voluntarily resign.

A House special committee is currently debating intensively government-proposed amendments to the central bank law. The team will continue the deliberation process although the House is scheduled to enter a 32-day recess starting Monday.

Many see the proposed amendment as being aimed mainly at removing legal obstacles to the ouster of Bank Indonesia Governor Sjahril from his post.

Sjahril was released Tuesday after five months of house arrest over alleged involvement in the Bank Bali scandal. Sjahril has so far denied the allegation.

President Abdurrahman Wahid has been demanding a major reshuffle at the central bank since last year, but Sjahril has resisted.

Asked to comment about the release of Sjahril, Rizal said that Sjahril and other board members could also be linked to other criminal cases including those concerning the counterfeiting of bank notes.

He said that the fake bank notes could not have been printed without collaboration with Bank Indonesia insiders because their serial numbers were the same as on original notes.

"Sjahril Sabirin is linked to the Bank Bali corruption case ... but there are also other, larger cases including the BLBI (emergency liquidity loans)... and the counterfeiting of bank notes which has inflicted losses worth trillions of rupiah on the state," Rizal said.

"Somebody must be responsible for these cases, morally and professionally," he added.

BLBI refers to the Rp 144.5 trillion of government emergency liquidity support given to ailing banks between 1998 and 1999 most of which was misused by the recipient banks due to weak supervision on the part of the central bank.

Separately, Rizal said that the House factions on the special committee have proposed new additions to the government-proposed amendments, including plans to force Bank Indonesia to pay tax and to allow the House to debate the central bank's budget.

Meanwhile, Sjahril said on Thursday that if the new central bank law forced him to step down, he would be willing to do so.

Asked if he still was interested in occupying the top position in Bank Indonesia, he said: "If my turn comes to an end, so be it, I've had enough. I'll try to find more fun things (to do)."

Sjahril was speaking at a breaking of the fast gathering with journalists. He retook possession of his office on Wednesday.

Asked whether he would propose new names to replace the five members of the board of governors who had tendered their resignations last month, he said: "I will still have to talk it over with the House."

Senior deputy governor Anwar Nasution and four other deputy governors tendered their resignations last month, a few days before the government proposed the amendment of the central bank law.

Sjahril reiterated that he had been betrayed by Anwar, but he declined to provide details.

The President has recently proposed Anwar for the top post at Bank Indonesia.

Sjahril did not see the amendments of the central bank law as urgent, saying there are other more important matters to deal with .

He admitted that the current central bank law might not be perfect, "but please don't forget it has only been in effect for about one year."

"If the House feels disappointed with the central bank's performance, it can summon the central bank board members and request that they account for their actions," he said.

"The House can control Bank Indonesia. So it's not true to say that the central bank carries out its day-to-day activities without House supervision," Sabirin added. (rei)