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)