Vice President Not Out of Woods Yet as Century Spotlight Lingers
University Students Alliance protestors hold up the heads of finance minister Sri Mulyani and VP Boediono in a demonstration pushing for a serious investigation into the Bank Century bailout scandal. (JG Photo/Safir Makki)
The national antigraft body has hinted it may question Vice President Boediono one more time over his role in the controversial 2008 bailout of Bank Century.
"It is very possible that there will be another questioning, depending on the task force assigned to handle the case," Busyro Muqoddas, a deputy chairman of the Corruption Eradication Commission (KPK), said on Monday.
He added that if the questioning did take place, it would likely be at the vice president's office again instead of at the KPK headquarters.
"It's more practical that way," he said. "If we did it at the KPK office, we would be restricted by the protocol regarding the deputy head of state."
The KPK has already come under criticism for its previous questioning sessions with Boediono, which all took place at the latter's office, in a marked break from the KPK's custom of compelling witnesses to come to its own office to testify.
Meanwhile, Abraham Samad, the KPK chairman, said investigators were unable to come up with anything conclusive following their last questioning of Boediono last month.
"There has been no conclusion from the investigators. We are still studying and analyzing Boediono's statement," he said, adding that once an analysis was completed, the KPK would make a decision on whether the vice president needed to be interrogated one more time.
Boediono, who was the Bank Indonesia governor at the time of the Rp 6.7 trillion ($570 million) bailout of Bank Century, was questioned as a witness for Budi Mulya, a former deputy governor who has been arrested and charged by the KPK with abuse of power for his role in approving the bailout at the behest of Robert Tantular, Century's erstwhile owner now serving a nine-year jail sentence for banking violations.
To date, the KPK has charged just two people — Budi and fellow former BI deputy governor Siti Chalimah Fadjrijah — in connection with alleged abuses of power for their roles in ignoring the capital adequacy ratio to qualify Century for the bailout.
In his latest testimony to KPK investigators, Boediono conceded that he had altered central bank policy in order to push through the bailout of Century.
The case remains one of Indonesia's most enduring financial scandals. The poorly managed lender applied to the central bank for short-term funding, or FPJP, in 2008, knowing that its capital adequacy ratio was insufficient to qualify for a capital injection. But BI felt the collapse of Century could have a rolling impact across Indonesia's financial services industry.
It subsequently ordered the disbursement of Rp 600 billion to Century, despite the fact that the bank's 2.35 percent capital ratio was fundamentally weak and below BI's requirement of 8 percent.
Boediono maintained that the bank was entitled to bending the rules to reflect the urgency of the circumstances — a response to a threat to the wider economy, rather than a rescue of an overextended lender.
Boediono also lent his support to the KPK in its bid to bring to justice anyone who stole money from the bailout, which ballooned to Rp 6.7 trillion.
Critics have long denounced the move, calling it a politically motivated measure designed to rescue depositors who were also major donors to President Susilo Bambang Yudhoyono and his Democratic Party, ahead of the 2009 elections.
The House of Representatives passed a resolution declaring the bailout flawed, prompting the KPK, the Attorney General's Office and the police to open up parallel investigations into the matter. A special committee was also set up at the House to oversee the probes.
Following Boediono's statement that he permitted the bailout in defiance of the capital adequacy ratio limit, legislators demanded a hearing with Boediono to seek further clarification. Boediono last testified in the case before the House in 2010.
Legislators have also threatened to revive a petition that could eventually lead to the vice president being impeached. However, the House Democrats have vowed to quell such a measure and to keep Boediono from testifying before the House.
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http://www.thejakartaglobe.com/business/govt-says-ready-sell-bank-mutiara-less-bailout/
Govt Says Ready to Sell Bank Mutiara for Less Than Bailout
Jakarta. The Indonesian government is prepared to sell Bank Mutiara for less than the 2008 bailout cost to ensure it meets its year-end deadline, the head of the state deposit agency said on Thursday.
The government spent an estimated 6.7 trillion rupiah ($593.31 million) at the height of the global financial crisis to rescue what was then called Bank Century and prevent what officials feared could be broader damage to the country's banking system.
"We can sell it for less than the bailout if the incoming bids do not meet the target," Deposit Insurance Agency head Kartika Wirjoatmodjo told reporters. By law, the bank has to be sold by the end of the year.
At least seven investors, mostly foreign banks and private equity firms, have expressed interest in buying a majority stake in Mutiara, including from Japan, China and Malaysia, he said.
He gave no details.
Mutiara is excluded from the 40 percent cap on foreign ownership of local banks which last year scuppered the drawn-out attempt by Singapore's DBS Group Holdings to take over Bank Danamon.
Last year, Bank Indonesia instructed the deposit agency to inject 1.25 trillion rupiah to lift Mutiara's capital adequacy ratio to 14 percent due to rising non-performing loans.
Preliminary bids will start in May and the deal should be closed before Nov. 20.
The bank's 2008 bailout continues to shake the political establishment with accusations flying that top officials and politicians diverted large chunks of the rescue money. The anticorruption agency is investigating the issue.
Southeast Asia's biggest economy, backed by growing middle class consumers, has generated interest from foreign banks as the country offers high interest margins compared with neighboring countries.
Japan's Sumitomo Mitsui Banking Corporation and South Korea's Woori Bank had won regulatory approvals to acquire Bank Tabungan Pensiunan Nasional and small size Bank Himpunan Saudara, respectively.
Reuters
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