State treasurers fall short of mandatory accountability

Like cashiers everywhere, surely state treasurers should be accountable to the public? Not necessarily. Supreme Audit Agency (BPK) Chairman Satrio B. "Billy" Joedono warns that the bill on the state treasury will not contain this principle of public accountability, meaning that the practice of state treasurers being accountable only to their superiors will continue. The bill being deliberated by legislators will be too weak to prevent corruption, says Joedono, who insists on maintaining the long- abused Indonesische Comptabiliteitswet (ICW) law inherited from the Dutch. Ir rules that state treasurers are independent and personally accountable for any losses incurred.

Question: Why do you strongly oppose the bill?

Answer: It is very regrettable that such a rigorous ICW law will be substituted with a draft law that contains several major weaknesses. The existing law strongly regulates what things can be done and what cannot in managing state finances.

The government argues that key chapters in the ICW have also been included in the bill.

Many materials in the ICW, which act as the guarantee on a prudential state finance system, are abolished. The bill rules that only the government -- the president, through the minister of finance -- holds sole authority in managing state finance. The president and all other executive officials are exempted from accountability, and the president is only required to issue presidential decrees in regulating state finance.

What about the bill itself?

The government has actually submitted three bills to replace the ICW. They are the bills on the state treasury, on state finance, and the bill on the audit of state finance accountability. I've made several protests to anyone willing to listen. I've also complained to three (finance) ministers from Bambang Subiantoro under then president B.J. Habibie, Bambang Sudibyo to Prijadi Praptosuhardjo. All shared my view. I strongly object to the bill.

What is the specific strength of the ICW law?

Our banks adopt the principle of comptabiliteit (public accountability). For instance a bank teller, before leaving the office every day, has to check the balance sheet of the money he receives from customers and the money he pays customers that day. And if the inflow and outflow are not balanced the teller is required to personally make up the loss.

I want all government treasurers to be like that. They are independent from their superiors because they are personally responsible for any losses that occur. It is the main principle of the ICW law.

Those who, due to their state duties, are responsible for receiving, keeping and paying money or precious goods are directly comptabel (accountable) for any losses. And they are also obliged to report to the Supreme Audit Agency (BPK). The treasurers are accountable to the parties or agencies outside their office. They are independent from their superiors. Such an obligation is abolished in the new bills.

Indeed the law was abused for the last 30 years. According to the law comptabel is an adjective, but then it was changed into a noun and became the title of the treasurer.

According to the bill, treasurers are accountable to their immediate superior. I said this to the House last October, and in February this year I said it again. If the bill is passed into law, then the entire power in managing state finance is controlled by the president who then authorizes the minister of finance to act on his behalf. There is no more principle of accountability; even if it still exists it is just between the ministers and finance minister, or the finance minister and president. State finance is solely managed by the executive branch. Other agencies (in this case BPK) have no right to audit.

How about public accountability?

An independent auditor is needed to audit state finances. Since the establishment of this republic, we have had external auditors and internal auditors. Internal auditors work at the ministries, state-owned companies and state agencies. In 1983, the Development Finance Comptroller (BPKP) was established.

Its establishment is based on a contradicting idea, because even as an apparatus of the government this agency claims to be an external auditor, even though it is directly controlled by and responsible only to the president. BPKP is actually an internal auditor of the government. It calls itself an independent agency but it bows to the president. Since then Indonesia has had a unique setup for state financial management. If we have political will let us return to our normal practice, where there is only one internal auditor and one external auditor (BPK).

Has the government completely abandoned the ICW law?

I have asked my staff, they shared my view that all articles in the present law are very good. The government has pledged to maintain all the good articles of the ICW law but not directly as provisions in the bill but in presidential decrees. In practice there is no problem, but in principle it's wrong ... the president could change presidential decrees anytime he wants.

What reactions have you received to your protests?

A very detailed law or regulation is often regarded as an obstacle to development. There are complaints that the ICW law is too detailed, too technical. This law is regarded as the product of Dutch colonial rule. But this is a good law. They (critics of the law) forget that this law binds the president.

A presidential decree is non-binding. That is the difference. But some people say I protested against the bill just because I wanted to maintain the status quo of BPK. (Kornelius Purba)