Treasury law leaves room for graft

Treasury law leaves room for graft

Rendi A. Witular, The Jakarta Post, Jakarta

Chairman of the Supreme Audit Agency (BPK) Satrio B. Judono
expressed disappointment on Friday with the newly endorsed State
Treasury Law as it fails to empower state treasurers to reject
any unscrupulous demands from their superiors that may lead to
the corruption of state funds or assets.

Satrio said that with the absence of such authority in the
law, BPK feared that the state treasurers could be squeezed by
other officials or their superiors to approve questionable
transactions or disbursement of state funds.

"The law is not what we had expected... The country's
management of state funds will remain as it was in the old days,
with messy internal control at state institutions over the
disbursement of the funds," said Satrio in a press briefing.

The House of Representatives passed on Thursday the long-
awaited state treasury bill into law, which Minister of Finance
Boediono boasted will greatly improve the management of state
funds and assets and thus help prevent corruption.

Satrio explained that the treasurers should be independent of
their superiors and other officials in order to help curb
corruption in the management of state funds and assets.

However, under the new law the treasurers are still restricted
by their superiors although they are personally responsible for
any losses of state money under their management.

"I am pessimistic about the law... Good management of state
funds should come first from strong and reliable internal
control," said Satrio.

BPK had proposed to the government and the legislators a
couple of years ago to include several articles that would give
the treasurers the power to reject improper payment orders that
may lead to the leakage of state funds or other irregularities.

For instance, the treasurers must be able to reject a proposed
transaction if there are no funds available in their accounts,
preventing them from taking funds allocated for other purposes.

The agency had also proposed an article that would strongly
regulate what things could and could not be done in managing
state finances, so that violations committed by treasurers could
be easily defined.

However, Satrio said that the government had rejected BPK's
proposal, saying such a huge authority for a treasurer could
obstruct the flow of fund disbursement, thus disturbing the
country's overall economic development.

"The government once said that a strong treasurer could foul
up development. That is why they rejected our proposal," he said.

The State Treasury Law provides rulings on how state funds,
assets and debts should be managed by government officials both
at the central government and local administrations. This law is
crucial to allow the enforcement of the State Finance Law, which
provides basic principles in public financial management,
approved by the House in March this year.

The House is expected to pass into law another bill on state
financial accountability to support the implementation of the
State Finance Law.

All these three laws, the drafts of which had been submitted
to the House in September 2000, are designed to replace Dutch
laws on treasury management.

The lack of political will to combat corruption has positioned
Indonesia this year as the second most corrupt country in the
Association of Southeast Asian Nations (ASEAN) after Myanmar, and
the 10th in the world, according to the Berlin-based Transparency
International.