BPK TO AUDIT BANK CENTURY

By Andi Abdussalam

Jakarta, Aug 29 (ANTARA) - The State Audit Board (BPK) is soon to audit ailing Bank Century into which the government has injected fresh funds totaling Rp6.7 trillion or far in excess of the Rp1.3 trillion the government had previously mentioned to the House of Representatives (DPR).

        "BPK will soon follow up a request for the auditing of the bank. We actually have began a preliminary investigation which is expected to be completed before the end of this fasting month. After the fasting month, we will carry out examinations on every details," BPK's chief auditor Syafri Adnan Baharuddin said.

        The audit board will carry out an investigative audit in details of Bank Century after the fasting month (August 22 - September 20) based on the request of the House of Representatives (DPR).

        House Commission XI on financial affairs has questioned the legal basis for the government to disburse an additional bailout fund of Rp5.4 trillion for Bank Century through the Deposit Insurance Agency (LPS). The government has initially asked the approval of the House to bailout the ailing bank with Rp1.3 trillion.

        "The figure we discussed in our latest hearing was Rp1.3 trillion. How could the Rp1.3 trillion all of sudden swell into Rp6.7 trillion. What we are questioning is its legal basis," Commission XI Chairman Ahmad Hafiz Zawasi said.

        However, BPK is not questioning the injection of Rp6.7 trillion alone, but all matters that caused the bank to collapse. "We are not suddenly questioning the injection fund but we are going to see why it has collapsed and why Bank Indonesia (BI/the central bank) did not give a warning," chief auditor Baharuddin said.

        He said that BPK examined BI and LPS's financial balance. The audit board is actually already able to draw a number of preliminary conclusions with regard to the Bank Century case.

        BPK has also consulted BI and the LPS with regard to its preliminary findings, and promised to deepen its investigation into the bank case.

        "We are trying to map out the data before moving forward to more detailed examinations. What was questioned by the House yesterday (at a hearing on Thursday) would strengthen BPK's auditing process of Century Bank," Baharuddin said.

        He said that BPK was not in a position to decide which party had made the mistake in the Century Bank case. "We are not in a position to blame any party. But we would like to explain that our preliminary examination indicated that there is another aspect that has to be disclosed," Baharuddin said.

        In the meantime, Baharuddin Aritonang, another BPK auditor, said that the House could soon made a request to BPK for the auditing of Century Bank. ?If the DPR makes the request, we have to audit it immediately,? he said.

        Dradjad H Wibowo of Commission XI of the House of Representatives said meanwhile that LPS might suffer a loss of Rp5 trillion when Century Bank divested its shares later on. "In my estimate Bank Century's shares are worth only about Rp1.5 trillion to Rp2 trillion. LPS must divest the bank's shares in three years at the latest, namely in 2011. This means that with an equity now at rp500 billion, LPS will suffer a loss of about Rp4.5 trillion to Rp5 trillion if it is later sold at Rp1.5 trillion to Rp2 trillion," Dradjat Wibowo said at a hearing with Finance Minister Sri Mulyani Indrawati on Thursday.

        He said that with equity amounting to Rp500 billion, the value of Bank Century shares when it was sold in 2011 would only reach about Rp1.5 trillion to Rp2 trillion, and this proceed would not be comparable to the amount of funds injected to the bank at Rp6.7 trillion.

        Therefore, he questioned the big amount of bailout funds injected into the bank. "We should examine whether there is a close relation between Century Bank officials and decision makers in the government," Wibowo said.

        He said that initially the government and BI only asked the approval of the House to set Rp1.3 trillion in bailout funds through the LPS for the bank but in its realization the amount swelled to Rp6.7 trillion.

        "We need clarifications on the details of matters that caused the swelling of the injected funds," he said.

        At Thursday hearing, Finance Minister Sri Mulyani Indrawati admitted that the injected funds came from the LPS, none of it came from the Emergency Funding Facility (FPD), "Up to now, BI has never used funds from FPD and funds which had implications with the state budget. All are made based on the consequence of LPS and based on the LPS legal corridor," the minister told the House hearing.

        The House raised concern that the swelling of the bailout injection fund would deplete significantly the funds of LPS so that tighter control over the deposit insurance agency is needed.

        The minister explained the chronology which led to the bailout of Bank Century amounting to Rp6.7 trillion. On November 21, 2008, the Financial System Stability Committee (KSSK) declared Bank Century a failed bank, which if not handled properly would create a systemic impact. On the occasion, the handling of the bank was also handed over to LPS.

        "Up to now, BI has never used the FPD funds so that there is no implications with the state budget," the minister said. ***2*** (T.A014/A/HAJM/17:50/A014)