AFP:Indon group slams IMF, WB over Bank Bali scam (fwd)

[Robert Weissman <rob@essential.org>]

Indonesian group slams IMF, World Bank over Bank Bali scam
JAKARTA, Aug 31 (AFP) - An Indonesian group Tuesday slammed world bodies
including the International Monetary Fund (IMF) for failing to sound the
alarm over an 80-million-dollar bank scam, despite closely monitoring the
Indonesian economy.
The IMF, World Bank and the Manila-based Asia Development Bank "must bear
some of the responsibility for the Bank Bali scandal," said the
International
NGO (non-governmental organisation) Forum on Indonesian Development.
The scandal revolves around Bank Bali's payment of 80 million dollars as a
"commission" to a company owned by the then deputy treasurer of the ruling
Golkar party.
The massive sweetener was designed to ensure the recovery of loans owed to
Bank Bali by three banks closed down by the government.
Golkar has denied it was used to party bankroll President B.J. Habibie's
re-election bid.
"This scandal occured during the bank's recapitalization (programme) which
is
part of the IMF bailout package," the NGO group said in a letter to
executives of the three bodies, whose loans are saving Indonesia from
financial collapse.
"Clearly, the WB, IMF and ADB have failed to properly supervise the use of
the loan."
The IMF and other donors gave a 44-billion-dollar aid package to salvage
Indonesia's battered economy in December 1997, a large portion of which
goes
towards funding a costly banking recapitalization programme.
The NGO organization demanded the three bodies immediately delay or halt
further aid disbursements until a new Indonesian government is formed
following June's parliamentary election.
Bank Bali's disgraced former president Rudi Ramly has claimed the
"commission" was necessary as he had spent a fruitless nine months trying
to
retrieve the loans, worth some 133 million dollars, from the Indonesian
Banking Restructuring Agency (IBRA).
Three officials at IBRA, which was set up under the IMF-led bailout
programme, are under police investigation over their alleged involvement.
The World Bank's deputy Asia-Pacific president, Jean-Michel Severino, and
resident country representative Mark Baird said Saturday they had only
learned of Bank Bali's problems with the IBRA on July 31.
Baird warned last week the World Bank might suspend its support for the
Indonesian economy unless the Bank Bali case was resolved rapidly.
The IMF's Asia-Pacific director, Hubert Neiss, said on Saturday: "This
scandal has to be cleared up as quickly as possible ... it shouldn't take
weeks and weeks, it should take maybe two or three (weeks)."
And Shoji Nishimoto, the Asian Development Bank's director of programmes,
said the scandal was "very disappointing," echoing calls by Baird and Neiss
for a thorough inquiry.
"It affects all of us because the IMF, the World Bank and the ADB have been
supporting the difficulties of the (Indonesian) government," he told CNN
Monday.
But the NGO forum accused the three multilateral bodies of failing to live
up
to their rhetoric on the case.
"Baird even said that his earlier threat was only meant to push the
government to resolve the case swiftly and satisfactorily," Binny Buchori,
one of the NGO forum's leaders, was quoted as saying by Monday's Jakarta
Post.