Sjahril vows not to step down from BI

JAKARTA (JP): Embattled Bank Indonesia Governor Sjahril Sabirin stressed on Monday that he would not resign from his post despite increasing criticism over the alleged mishandling of billions of dollars in emergency liquidity support to ailing banks between November 1997 and early 1998.

Sjahril said that according to the new central bank law, his office term is for four years.

"I won't step down. If I resign because of pressure it means that I'm violating the law," Sjahril announced before attending a meeting with senior economics ministers.

"Those who apply pressure (for Sjahril to resign) also violate the law.

"So for the time being, I will just stay calm," he added.

The central bank law, enacted in May 1999, guarantees Bank Indonesia's independence from executive control. The law stipulates that only the House of Representatives can remove a central bank governor and only when the official is found to have violated the law.

Rumors that Sjahril was considering resigning escalated last week after Minister of Investment and State Enterprises Development Laksamana Sukardi said on Thursday that he was willing to replace Sjahril. Laksamana is a former banker.

President Abdurrahman Wahid hinted early this year that he might ask the House of Representatives to replace Sjahril following an audit that allegedly discovered irregularities in the transfer of the multibillion dollar bank liquidity support.

Several legislators have also called on Sjahril to step down to give way to the investigation of the case.

Sjahril denied the rumors that he had submitted his resignation to House Speaker Akbar Tandjung.

But he said that he had submitted three names to the House as possible candidates to replace deputy governor Iwan Prawiranata, whose term will expire in May.

Sjahril declined to name the candidates, but sources claim they were deputy governor Aulia Pohan and senior Bank Indonesia officials Burhanuddin Abdullah and C. Harinowo.

He also dismissed rumors that Iwan's replacement was related to the alleged liquidity support scandal.

Sjahril added that starting in May, Bank Indonesia would only have six deputy governors. At present there are seven.

The central bank provided some Rp 164.5 trillion (US$23 billion) in liquidity support to ailing banks when the country's economic crisis deepened.

A general audit conducted by the Supreme Audit Agency (BPK) last December revealed that the central bank had violated procedures in the transfer of some Rp 80 trillion of the liquidity support.

Bank Indonesia has so far rejected the BPK audit report.

The agency is currently conducting an investigative audit into the central bank and recipient banks to clarify the matter. The audit is expected to be completed in May.

Bank Indonesia senior deputy chairman Anwar Nasution last week defended the central bank governor, saying that Sjahril should not be held responsible for the alleged mishandling of the liquidity support because the alleged irregularities took place before Sjahril took over from the previous governor, Soedradjad Djiwandono, in February 1998.

The government provided the emergency liquidity support in a bid to help banks stay afloat amid plunging confidence in the industry. (rei)