Yudono defends keeping full PwC audit under wrap

Yudono defends keeping full PwC audit under wrap

JAKARTA (JP): Head of the Supreme Audit Agency (BPK) Satrio B.
Yudono claimed on Wednesday that the agency was initially unaware
of the legal implications and penalties of the
PricewaterhouseCoopers (PwC) funds-tracing exercise in the Bank
Bali scandal.

But he said that when the agency subsequently became aware of
the legal consequences, the agency decided to break Indonesia's
earlier promise to the International Monetary Fund (IMF) to
disclose the full PwC audit report, which contains the scandal's
"flow of funds".

"These became increasing clearer as the investigation
proceeded and objections were received from lawyers representing
persons and firms being asked to furnish information contained in
their bank accounts on the instruction of Bank Indonesia to their
respective banks," Yudono told IMF Asia Pacific director Hubert
Neiss in a letter dated Sept. 16, 1999, a copy of which was
obtained by The Jakarta Post.

"Had I kept my promise to you... my staff and the PwC
investigators would have been subject to the threat of this
penalty," he added.

He said that under the country's banking secrecy code, the
full PwC audit report which revealed details of personal bank
accounts could only be handed over to the police.

"Violation of this stipulation carries penalties of up to
US$25 million (depending on the exchange rate), and jail
sentences of up to four years," he pointed out.

The Bank Bali scandal revolves around the transfer of Rp 546
billion from the bank to politically well-connected PT Era Giat
Prima (EGP) as a commission fee to help the bank recoup Rp 904
billion in interbank loans on a closed-down bank.

The bank should have not used the service of EGP because the
interbank loans were guaranteed under the government blanket
guarantee program.

There have been allegations that the inner circle of President
B.J. Habibie was using EGP to help raise money for political
purposes ahead of the upcoming presidential election.

Some analysts consider the fallout from the Bank Bali case to
have dealt a serious blow to Habibie's presidential bid.

The IMF, which has aired serious concerns about the Bank Bali
case, demanded the government allow PwC to conduct an independent
audit on both the Indonesian Bank Restructuring Agency (IBRA) and
Bank Indonesia.

Based on the country's central bank law, the PwC audit on the
central bank had to be carried out with BPK.

The audit was completed on Sept. 6, but BPK has so far only
handed over the full report to the police. The full report
contains the flow of funds, which may reveal the names of people
involved in the scandal.

Neiss said on Tuesday that the fund would continue to withhold
aid disbursement to Indonesia until the government had taken
substantial steps toward resolving the Bank Bali scandal,
including disclosure of the full PwC audit report.

Neiss was speaking at a press conference on the sidelines of
the IMF and World Bank annual meeting in Washington.

Yudono also said on Wednesday that based on Law No. 5/1973 on
BPK, any audit indicating criminal activities could only be
submitted to the police.

The law stipulates that any person unlawfully making use of
information gained from investigations made by BPK is liable to a
jail sentence of up to six years.

"Had I kept my promise to you ... my staff and the PwC
investigators would be subject to the threat of this additional
penalty," Yudono said.

"In the final event, while providing many interesting leads,
the investigation undertaken by PwC personnel is proven to be
inconclusive.

"If fails to establish any conclusive links of deliberate
collaboration between those identified as major actors in the
case."

"The flow of funds analysis fails to identify any of these
persons to have received any money directly linked to the
processing and payment of Bank Bali's claim," Yudono said, adding
that the report had identified former Bank Bali president Rudy
Ramli and EGP's owners as having received money.

Yudono added that the flow of funds analysis, by implicating
persons with no identifiable link to the case, had gone too far.

Police say the PwC report will only be considered as input in
their investigations, as they question the methodology of the
audit process. (rei)