The House demands government dissolve IRC and FSAC

JAKARTA (JP): The House of Representatives (DPR) called on Tuesday for the government to dissolve the Independent Review Committee (IRC) and the Financial Sector Action Committee (FSAC), saying they were ineffective in overseeing the country's costly bank restructuring program.

Head of House Commission IX for banking and finance Sukowalujo Mintorahardjo said the committees, which were established by the government in July to supervise the country's bank restructuring program, lacked the authority to carry out their tasks.

"The presidential decrees on the two committees must be revoked, and be replaced with a new decree to create a more effective committee," he said at the conclusion of a meeting between legislators and IRC chairman Mar'ie Muhammad.

Legislators said the more powerful committee should be headed by Mar'ie, a former finance minister, who has a clean track record in the bureaucracy.

The meeting was organized by the House special investigation team on the Bank Bali scandal, which includes House Commission II for legal affairs.

The House came to the conclusion after Mar'ie acknowledged that the IRC was ineffective due to its lack of authority and limited staffing levels.

The IRC was formed in late July this year by B.J. Habibie's administration. The committee's mission is to review the Indonesian Bank Restructuring Agency's (IBRA) programs and to advise the finance minister.

The committee is run by five people, including Mar'ie and three representatives from respectively the World Bank, the International Monetary Fund and the Asian Development Bank.

Mar'ie said the FSAC should assume a greater responsibility in overseeing the country's bank restructuring program because its mandate was to supervise and report to the President.

Members of FSAC, which was also formed in July, include the key economic ministers.

Mar'ie said that despite FSAC's greater authority, the committee had not been optimal in carrying out its tasks.

The country's bank restructuring program has been damaged by the Bank Bali scandal, which revolves around the "illegal" transfer of some US$80 million from the bank to a private firm linked to Habibie's inner circle.

In its audit report on the scandal, PricewaterhouseCoopers (PwC) said there were indications of corruption and fraud in the Bank Bali transaction.

Preventing a similar scandal from occurring in the future, particularly within IBRA, the country's largest economic vehicle which controls some Rp 600 trillion worth of assets, is high on the agenda of many of the newly elected legislators.

Mar'ie welcomed the move by the House to strengthen the supervision of IBRA and the country's bank restructuring program.

"There are too many thieves in this country. That's the biggest problem," said Mar'ie, who has been dubbed "Mr. Clean" by the media.

Legislator Ekky Sjachruddin said the House should provide Mar'ie with more power to prevent and fight corruption in the bank restructuring program.

"Mar'ie is actually a cobra, but the previous government intentionally sucked the poison out from him by positioning him in the powerless IRC and created the more powerful FSAC," Ekky said.

"So let's give Mar'ie more power," he said.

Mar'ie said he had protested the creation of FSAC to former finance minister Bambang Subianto.

"But he said at the time that nothing could be done because the presidential decree on its establishment had been issued," he said.

Mar'ie said it was crucial to create an effective supervision system for IBRA to ensure that it functioned successfully in managing its considerable assets.

He urged the government to change IBRA's status from a government agency to a limited liability company in order to allow it to operate like a bank with a transparent accountability system.

He said changing IBRA's status would free it from interference on the part of politicians, adding that IBRA, whose job is very unpopular with large debtors, must be independent from the Ministry of Finance.

Mar'ie drew attention to Malaysia's PT Danaharta, a company with a similar mission to IBRA's.

"IBRA is very important because it controls huge assets. If it fails, our bank restructuring program will also fail," he said. (rei)