President asks House to replace BI governor

JAKARTA (JP): President Abdurrahman Wahid has asked the House of Representatives to replace Bank Indonesia (BI) Governor Sjahril Sabirin following the disclosure of the damning audit report on the central bank, House Speaker Akbar Tandjung said on Wednesday.

"Considering the current situation at BI, the President has proposed that the BI governor be replaced," Akbar told journalists at the House.

Akbar, however, said that the House would rather wait until the Supreme Audit Agency (BPK) completes its investigative audit on the central bank to determine if there is malfeasance.

"It's true that the plan is there, but the House has to refer to the law, which stipulates that the replacement of the BI governor is only permitted if, among other things, there are indications of banking crimes."

Sjahril separately said that he had no problem with the government and House's plan to remove him. "It's all right. We stay calm here."

The fate of Sjahril, Akbar said, should depend on the results of BPK's investigative audit, which should be completed by March 31.

BPK's investigative audit is to follow up on the results of its general audit on Bank Indonesia's balance sheet of May 17 -- the date when the central bank became independent of the government.

The agency tagged a "disclaimer" or "no opinion" label on its audit of Bank Indonesia because of serious weaknesses in the central bank's internal control.

The results of BPK's general audit on Bank Indonesia's balance sheet of May 17 indicated the central bank's books were in the red and that it needed recapitalization.

Minister of Finance Bambang Sudibyo said on Tuesday that the government was committed to recapitalizing Bank Indonesia, no matter what the cost, and to ensure a minimum capital of Rp 2 trillion (US$285 million).

The cost of recapitalizing Bank Indonesia would be equal to the central bank's negative equity plus the Rp 2 trillion capital, Bambang said.

Coordinating Minister for the Economy, Finance and Industry Kwik Kian Gie said on Wednesday that the recapitalization of Bank Indonesia would not burden the government's budget as the government would issue bonds to recapitalize the central bank.

"Does the audit on BI have any implication on the state budget? Not at all. The international societies know that the audit on BI does not affect BI's solvability and liquidity."

Akbar said the House would support the government's recapitalization of Bank Indonesia and would ask BPK to conduct due diligence on the central bank to determine the true status of its books.

"The general audit on BI by BPK must be followed up by an investigative audit to find out details of several issues including BI's emergency liquidity support and equity status," he said.

Akbar also called on the Attorney General's Office to conduct a thorough investigation into the alleged irregularities in the central bank.

"The Attorney General's Office should follow it up in court if it finds any irregularities in Bank Indonesia," he said, adding the House would also ask the government to follow up the audit agency's findings on the central bank.

Asked whether the House would propose a reshuffle in the central bank's board of governors, Akbar said that would depend on the Attorney General's Office's investigation into the alleged irregularities.

"If irregularities are found, they should be processed in court. According to law, the House has the authority to propose a reshuffle of the central bank's governor, deputy governor and directors if crimes are found," he said. (rms/prb/rid)