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)