PwC unfair and speculative in Bank Bali audit, says Sjahril

PwC unfair and speculative in Bank Bali audit, says Sjahril

JAKARTA (JP): Bank Indonesia Governor Sjahril Sabirin lashed
out at international auditor PricewaterhouseCoopers (PwC) on
Wednesday for being "unfair" to the central bank during its audit
process over the Bank Bali case.

The central bank governor also said that several of the
auditor's conclusions were "speculative" because PwC did not
provide Bank Indonesia with the transcript of its interview
results with the central bank's officials to allow clarification
in case of any misleading content.

He said that PwC had earlier agreed to such a routine, which
is a standard process.

"We feel that as an auditor, PwC does not understand the
standard and ethics of the audit profession," he told the press.

Sjahril said that since the PwC audit report was widely
circulated, it was in the interest of Bank Indonesia to check the
truth of the substance of the report.

"If there are things which are not true and tarnish the image
of Bank Indonesia and its officials, we have the right to make an
objection... and if necessary, file a lawsuit," Sjahril said,
adding that the central bank had recorded the interview, which
could be used as evidence.

He declined to point out which of the conclusions were
speculative.

Sjahril acknowledged that he received the limited version of
the PwC audit report, not the full report.

PwC was assigned late last month by the Supreme Audit Agency
(BPK) to audit the central bank in relation with the Bank Bali
scandal, including a verification of Bank Indonesia's own audit
result.

The auditor handed over on Sept. 8 the audit result in long
and short forms as requested by BPK. The full report includes
the flow of funds in the Bank Bali scandal. BPK said that the
full report was only given to the police and Attorney General's
Office.

The Bank Bali scandal revolves around the transfer of Rp 546
billion from the bank to PT Era Giat Prima (EGP) as a commission
fee for its help to recoup some Rp 904 billion in interbank loans
on closed institutions. The loans were guaranteed by the
Indonesian Bank Restructuring Agency (IBRA), therefore the bank
did not need another party's help.

There are allegations that President B.J. Habibie's inner
circle was involved in the scandal. The Habibie camp was accused
of using the money for political purposes in the run-up to the
November presidential election.

Sjahril also lambasted PwC for saying that Bank Indonesia was
uncooperative, which hampered the audit process.

"That is completely untrue," he said, pointing out the
valuable time Bank Indonesia officials devoted to interviews, and
the various documents provided, including the central bank audit
findings.

"PwC never thanked us for that," Sjahril said.

He said that PwC demanded to be also allowed to audit personal
bank accounts of people not related to the Bank Bali and EGP
transaction, which was impossible as it would violate banking
secrecy codes.

Sjahril said that the repayment of interbank loans to Bank
Bali was not a decision made by Bank Indonesia, but by IBRA.

He pointed out that the central bank's role was only to help
in the verification of Bank Bali claims as ordered by IBRA, and
acted only as the "banker" of the agency to transfer the payment.

"... It is IBRA's authority," he stressed in an apparent sign
of friction between Bank Indonesia and IBRA.

Meanwhile, Minister of Justice/State Secretary Muladi denied
rumors on Wednesday that B.J. Habibie was set to fire finance
minister Bambang Subianto and IBRA chairman Glenn Yusuf.

Muladi told reporters at the State Palace that the President
summoned both officials to his residence on Tuesday evening to
tell them "to work more professionally".

Rumors circulated on Tuesday that Habibie planned to dismiss
both officials out of displeasure over their testimonies on
Monday to the members of the House of Representatives disclosing
the involvement of Habibie's chief adviser, Head of the Supreme
Advisory Council Arnold Baramuli, in the Bank Bali scandal.

In a related development, National Police chief of detectives
Maj. Gen. Da'i Bachtiar said on Wednesday that IBRA deputy
chairman Farid Harianto was declared a suspect in the ongoing
police investigation into the scandal.

"He is currently being questioned for violating Banking Law
No. 10/1998 and Articles 372 and 378 of the Indonesian Criminal
Code on fraud and embezzlement," Da'i told reporters at the
National Police Headquarters, following a meeting with eight
legislators. (rei/ylt/prb)