Three named candidates for top BI job

Three named candidates for top BI job

JAKARTA (JP): President Abdurrahman Wahid named Anwar
Nasution, Siti Fadjriah, and Hartadi A. Sarwono on Saturday as
candidates for the new chief of Bank Indonesia following the
resignation of several top officials of the central bank late on
Friday.

Presidential spokesman Wimar Witoelar said that the House of
Representatives Commission IX on the state budget and banking was
expected to convene on Monday to decide on the appointment of a
new central bank governor.

"We expect the House to have already made a decision by Monday
at the latest," Wimar told reporters.

Anwar is the former senior deputy governor of BI who tendered
his resignation during a closed-door meeting with the government
and House Commission IX.

Siti is a senior banking supervision officer at the central
bank, while Hartadi is a senior monetary research officer.

Meanwhile, House Speaker Akbar Tandjung said Saturday that
Anwar "is the best candidate available to lead BI."

"Compared to all previous BI deputy governors, it's a fact
that Pak Anwar is still the best of all. We would prefer him to
sit in the BI driving seat," Akbar told reporters.

"Anwar was the senior deputy governor and he has a suitable
background, ranging from his past experience to his formal
education," he added.

"He has also proven his strong integrity and I think he can
lead BI in this time of crisis."

Wimar said that the three names were candidates for the
position of central bank governor, but he did not explain what
would happen with Sjahril Sabirin, who is legally still the
Governor of BI despite his status of being under house arrest
over alleged involvement in last year's high profile Bank Bali
scandal.

According to the new law on the independence of the central
bank which was approved by the House of Representatives in May
1999, the eight members of the central bank board of governors,
including the governor, may not be removed from office before the
end of their terms unless they have been proven guilty of
committing a crime, become incapacitated or voluntarily resign.

Sjahril so far has declined to resign.

According to the central bank law, the President proposes the
candidates for the posts of central bank governor and senior
deputy governor, but the candidates for the six deputy governor
posts are proposed by the governor and senior deputy governor.

In case the central bank governor is unable to perform his
duties, the senior deputy governor takes his duties as acting
governor.

Anwar took over this role in June this year after Sjahril was
detained.

Anwar and four other deputy governors, including Miranda S.
Gultom, Burhanuddin Abdullah, Achwan and Dono Iskandar, announced
their resignations amid calls by the President to reshuffle the
management of the troubled central bank. But deputy governors
Achjar Iljas and Aulia Pohan have so far failed to tender their
resignations.

Bank Indonesia has been troubled for more than a year due to a
dispute with the government over the controversial emergency
liquidity support for ailing domestic banks.

Coordinating Minister for the Economy Rizal Ramli said that
the government would take legal action against BI officials who
had abused their powers in relation to the channeling of the
liquidity facility.

The government, via the central bank, injected some Rp 144.5
trillion in emergency loans into troubled domestic banks between
September 1997 and January 1999 to help reimburse depositors'
money at a time of massive bank runs.

But the Supreme Audit Agency (BPK) revealed in its audit
report that some Rp 138 trillion of the liquidity support
facilities had been improperly channeled by BI, and around Rp 80
trillion of the loans had been misused by the recipient banks.

The government has issued bonds to BI to cover the loan
facility, but after the BPK findings it later threatened to
retrieve part of the bonds and demanded BI to pay for the loans
that were misused.

The central bank initially balked at the demand, but it later
agreed to share part of the losses.

After months of debate, the government and BI finally agreed
on Friday that the central bank would pay Rp 24.5 trillion by
issuing bonds to the government.

There had been strong speculation earlier that the government
would have to recapitalize BI to save the central bank from
bankruptcy due to the huge burden of covering part of the misused
loans.

But Anwar said that the paying of Rp 24.5 trillion via bonds
would not cause the central bank's capital to drop to below the
minimum Rp 2 trillion level.

Legislators and government officials had earlier demanded the
reshuffling of the central bank's management as a precondition
for the government's recapitalization of BI.

"We thank the House for not liquidating, recapitalizing or
humiliating BI," Anwar told a media briefing following the
meeting with the House commission. (rei/edt)