Agence France Presse, Jakarta – The central bank may have violated procedures relating to US$11 billion worth of emergency liquidity for debt-ridden banks during the Asian financial crisis, according to an audit report.
Almost half the liquidity support channelled into Indonesia's banking system by the central bank at the height of the crisis may have been lent in violation of procedures, the report obtained yesterday claims.
The report by the government's Supreme Audit Board, and international consultancy KPMG, alleges that Bank Indonesia did not follow proper procedures in providing 80.24 trillion rupiah in liquidity support to prop up crippled banks in 1997 and 1998.
The total handed out by the bank to help stem panic runs on deposits amounted to 164.53 trillion rupiah, all of which has been refunded by the government.
The money, some of which has allegedly disappeared offshore, has been reimbursed by the government in the form of obligations. But the amount is still subject to verification and review.
The audit, which runs into hundreds of pages, covers Bank Indonesia's books as of May last year, just before its debut as an independent monetary institution. The documents contain numerous allegations of procedural violations and lax accounting and supervision practices.
It also alleges that the bank did not properly make provisions for 22.56 trillion rupiah in foreign-exchange losses.
The figures from the audit have yet to be officially released, but preliminary data indicating that Bank Indonesia's books were in the red was made public late last month.
The government and the International Monetary Fund have since called for Bank Indonesia to be recapitalised.
They have also urged a new investigative audit be conducted to see whether there were any criminal violations by central bank officials.
"The Supreme Audit Board believes that of the total Bank Indonesia liquidity support injected into the banks amounting to 164,536.10 billion rupiah, the amount eligible to be taken over by the government was 74,866.06 billion rupiah, while that which should not have been taken over by the government was 80,248.38 billion rupiah," the documents said.
Bank Indonesia earlier said the amount in question was only 51.7 trillion rupiah. Bank officials have yet to comment on the leaked report.
The audit documents claim that among the violations, the central bank continued to inject funds into problem banks after they had suffered negative clearing for more than five days running.
Other violations occurred in its allotment of liquidity credit to individual banks, including its treatment of discount facilities covering 26.6 trillion rupiah in liquidity credit owed by Bank Central Asia, the audit alleged.
It also said Bank Indonesia had not properly provisioned for 8.9 trillion rupiah in doubtful loans owed by private, state and nationalised banks.
In addition, it failed to write off potential losses from 7.36 trillion rupiah in trade credits it awarded to two conglomerates, the Texmaco Group and the Bakrie Group. The Texmaco Group has denied in the past allegations of corruption relating to the facilities.
The audit also cast doubt over Bank Indonesia's accounting of 129.5 trillion rupiah in foreign exchange treasury bills and bonds. It alleged that the weaknesses meant it could not give an official opinion on the true state of the central bank's books.