The House demands government dissolve IRC and FSAC

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)