Indonesia bank chief under pressure to quit

Governor Sabirin is linked to a banking scandal

Indonesian president Aburrahman Wahid has called on the head of its central bank to resign.

The call comes as evidence mounts that Bank Indonesia governor Sjrahril Sabirin is implicated in a political and banking scandal.

The case centres around the illegal transfer of funds last year from insolvent Bank Bali to a company closely linked to the ruling party at the time, the Golkar Party.

Many believed the money was meant to fund the re-election campaign of then President B.J Habibie, whose chances of re-election were scuppered by its discovery.

Governor questioned

State prosecutors questioned the governor on Monday about his involvement in the case.

"I myself have obtained a handful of data about bad things that have been going on for a long time," President Wahid said. "Therefore, in my opinion, once a governor of Bank Indonesia is named as a suspect in a case that would proceed to the court...he should resign and be replaced temporarily by a senior deputy," he said.

Governor Sabirin - close to President Soeharto - has denied any wrongdoing and has repeatedly resisted calls from the government for his resignation.

Stock market sell-off

The uncertainty surrounding the position of the central bank governor has fed into the markets, fuelling a stock market sell off and a fall in the rupiah.

Deputy governor of the central bank Achjar Iljas played down the impact of the feud. He said:"We expect the impact on the economy will be limited. We are doing our best."

He has previously accused President Wahid of illegally interfering in the central bank's affairs by trying to oust the central bank governor.

President Wahid was elected promising democratic and economic reforms in October. Since then, he has pressured some government officials to resign.

It is not as simple in the case of the central bank governor and the President's comments raise questions about the independence of the central bank.

Under a law introduced last year, giving the central bank independence from the executive, only parliament can sack the governor.

The governor should be only be forced to resign in the case of illness or proven corruption.