Sjahril finally meets with Megawati
Fabiola Desy Unidjaja, The Jakarta Post, Jakarta
Bank Indonesia governor Sjahril Sabirin and his deputies met with President Megawati Soekarnoputri on Monday at the State Palace for around 45 minutes, the first formal meeting between the President and the independent central bank since Megawati assumed power in late July.
Sjahril was accompanied by senior deputy governor Anwar Nasution and deputy governor Miranda Goeltom. None of Megawati's senior economic ministers participated in the meeting.
Sjahril, who is currently facing a court battle over his alleged involvement in the high profile Bank Bali scandal, declined to comment much about the meeting, saying only that the central bank would continue to work closely with the economics team to resolve the country's economic woes.
Sources said Megawati had turned down several times Sjahril's request for a formal meeting.
Relations between the government and Bank Indonesia, which became an independent central bank in May 1999, plunged to their lowest level during the administration of Abdurrahman Wahid, Megawati's predecessor, who openly demanded the resignation of Sjahril in an attempt to cleanse the central bank of corruption.
The near-blind Abdurrahman, who was dismissed by the People's Consultative Assembly (MPR) due to incompetency, also demanded the amendment of the central bank law.
The demands followed an audit result by the Supreme Audit Agency (BPK), which indicated that some Rp 138.4 trillion (US$13.02 billion) of the Rp 144.5 trillion in central bank emergency loans channeled to banks facing massive runs during the height of the 1997 financial crisis had been misused. The agency blamed the leakage on Bank Indonesia's weak supervision.
A huge proportion of the loans was channeled to banks owned by powerful businessmen with close ties to the family of former authoritarian president Soeharto.
As a result of the BPK audit, the government declined to cover the cost of the emergency loan facility, putting the central bank into near-bankruptcy. The government finally agreed to cover part of the loans to save Bank Indonesia from bankruptcy only after intense lobbying, facilitated by the House of Representatives, and after several Bank Indonesia top officials tendered their resignations, including Anwar and Miranda.
But the finance ministry is now planning to appoint a foreign consultant to carry out a new audit to calculate the amount the government and the central bank must each bear.
The prosecutor has demanded a four-year jail sentence for Sjahril for abusing his power in relation to the Bank Bali scam, which centered on the illegal transfer of some Rp 904 billion from the bank to companies linked to the then ruling Golkar Party.