Supreme Audit Agency finds Rp 14.4t in unreported credits

JAKARTA (JP): The Supreme Audit Agency (BPK) has found an additional Rp 14.4 trillion (US$1.3 billion) in bank liquidity support facility funds disbursed by Bank Indonesia during the period of 1998 and 1999, in addition to the Rp 144.5 trillion so far reported by the central bank.

BPK chief Satrio B. Joedono, however, said on Saturday that the new figure had yet to be clarified with Bank Indonesia.

Joedono said that the additional loan facility funds could create new problems when determining who would be responsible for the cost: the government or Bank Indonesia.

He said that the additional liquidity support facility was believed to have been channeled by Bank Indonesia between January 29 and May 24, 1999.

BPK made the statement following the completion of its audit of Bank Indonesia's 2000 financial accounts.

Bank Indonesia, on behalf of the government, distributed massive amounts of money under a liquidity support facility between 1998 and 1999 to help banks meet an outflow of cash at a time when confidence in the banking industry plummeted.

The facility was established to avoid a widespread collapse in the country's banking system.

Bank Indonesia has claimed that the total amount of liquidity facility funds disbursed totaled Rp 144.5 trillion.

But the loan facility became a controversy after BPK revealed that more than Rp 138 trillion of the loans were misused by recipient banks, mostly owned by the cronies of former president Soeharto. Common cases of impropriety included intergroup trading and currency speculation, which consequently caused the rupiah to tumble.

BPK said in its audit report that the abuse was possible as a result of weak supervision by Bank Indonesia.

Following BPK's revelation, the government declined to be responsible for the cost of the liquidity support facility, risking the bankruptcy of Bank Indonesia.

President Abdurrahman Wahid then demanded that Bank Indonesia Governor Sjahril Sabirin resign to allow a massive restructure at the central bank, which had been plagued by rampant corruption. Sjahril has declined to submit to pressure from the President. The government cannot remove a Bank Indonesia governor before his or her term ends because of the central bank's independent status.

After further developments, involving intensive political negotiations and the move by five of Bank Indonesia's seven deputy governors to tender their resignations, the government finally agreed late last year to cover a huge part of the liquidity support facility. The government has issued bonds to Bank Indonesia to cover the costs, although the House of Representatives has yet to approve the plan.

If the government also has to cover the additional Rp 14.4 trillion yet another burden will be imposed on the already strained state budget. (rei)