SBY Failed to Act on Bank Century Bailout, Jusuf Kalla Tells Court
Jakarta. President Susilo Bambang Yudhoyono did not take action when then vice president Jusuf Kalla told him about Bank Indonesia's Rp 2.7 trillion ($235 million) bailout for Bank Century in 2008, the latter told a the Jakarta Anti-Corruption Court on Thursday.
Kalla, who was testifying against former Bank Indonesia deputy governor Budi Mulya, told the court that he reported the bailout to Yudhoyono on Nov. 26, 2008, immediately after the president returned from an overseas trip.
"At that time he only listened and said that we would discuss it later," Kalla said.
The former vice president added that Yudhoyono still refrained from making a move even after the bailout reached a whopping Rp 6.7 trillion.
Kalla said he was shocked when he received a report from Sri Mulyani, the then finance minister, and Boediono, the Bank Indonesia governor at the time, about the Rp 2.7 trillion bailout to Bank Century on Nov. 25, 2008.
When questioned Sri Mulyani on why the lender was given the large injection of funds, the latter explained the bank downfall was caused by the criminal actions of its owner, Robert Tantular.
Kalla then ordered the National Police chief to arrest the businessman.
Kalla confirmed he had told investigators from the Corruption Eradication Commission (KPK) that Sri Mulyani regretted the decision to approve the bailout, allegedly calling the decision a mistake.
"Yes, that was my statement," Kalla said when judge Made Hendra asked him whether Sri Mulyani told him that the bailout had no legal basis.
According to Kalla, the former finance minster made the statement expressing her remorse on Sept. 30, 2009, a year after the bailout to Bank Century.
Kalla said he assumed Sri Mulyani regretted her actions when she allegedly claimed that she could "die standing."
"Based on our conversation, in which Bu Sri Mulyani said she could 'die standing,' she meant that she had made a mistake. No one would want to die standing," Kalla said.
However, Sri Mulyani who testified at the court last week, defended her decision, saying it was made to prevent Indonesia's banking system from collapsing.
"I made the right decision to deal with the crisis at that time," she said.
Sri Mulyani added that her decision to release a short-term loan facility (FPJP) of Rp 6.7 trillion was aimed at protecting roughly Rp 1,700 trillion worth of assets in Indonesia's banking sector, and to protect some 65,000 Bank Century customers who held savings of up to Rp 2 billion each and 547 customers with even more than that in their accounts.
In 2008, economies worldwide were dealing with the fallout from the collapse of Lehman Brothers, amid concern that a credit crunch would send financial markets reeling.
Sri Mulyani served as head of Indonesia's Financial System Stability Committee (KSSK), an ad-hoc body that was created to cushion the impact of the 2008 crisis on Indonesia's financial sector.
"In my capacity as head of KSSK, I prevented a crisis. It was proven that Indonesia was not hit by the impact of the global economic crisis as evident in 2009, when the country's economic growth turned out to be one of the best [in the world]," she said.
In her testimony, she repeated having been upset with the central bank for reporting changes in data on Century that ultimately led to the bailout.
Sri Mulyani said the central bank kept changing the figures of Century's capital adequacy ratio (CAR), which partly became the reason for such a dramatic jump in funds for the bailout, from Rp 632 billion to the final figure of Rp 6.7 trillion.
"If the figures keep jumping, I might die standing," she said, repeating her own remarks made during one of the meetings of the KSSK in 2008.
"In my upset state, I might have said that the decision [to bail out Century] should be reviewed," added Sri Mulyani, who is now based in Washington, DC, as managing director of the World Bank.
Blanket guarantee
Kalla said there was no legal basis for Bank Century's temporary capital injection (PMS) because current government regulations don't govern blanket guarantees or full guarantees.
Kalla added that he specifically gave a reminder of that fact several weeks before the bailout was made.
"On Nov. 13, 2008, it was only reported that [Bank Century] had failed to settle transactions. At that time I said that it was normal. But then I said the government can't offer a full guarantee and, therefore, a bailout was not allowed," Kalla said.
He said the regulations only allow full guarantees for customers with savings of up to Rp 2 billion in their accounts and thus a bailout for Bank Century violated the government's policy.
He added that the former finance minister asked him on Oct. 13, 2008 to approve a regulation on blanket guarantees, but claimed he rejected the request.
Vice President Boediono will be a witness for the prosecution today in the trial of Budi Mulya, a former central bank official who is accused of involvement in the bailout of Bank Century.
The KPK has installed several portable air conditioners in the court room and big-screen television sets in several parts of the building to anticipate a huge crowd.
The court is also beefing up security around its premises by coordinating with the police, the KPK and presidential guards.
The Jakarta Anti-Corruption Court has decided the trial will only run until 3 p.m.
KPK deputy chairman Bambang Widjojanto said that the proceedings requiring Boediono to take the witness stand will be open to the public.
"Basically it is an open trial, which means the public may view the proceedings," Bambang said on Wednesday, adding that security during the court session will be under the presidential guard's control.
The KPK official denied that the anti-graft body had arranged special facilities for Boediono's testimony.
In the indictment against Budi Mulia last month, KPK prosecutors alleged that Budi conspired with the country's current vice president, who was central bank governor at the time, and several other former officials of Bank Indonesia for abusing their power and violating the law by granting Bank Century the short-term loan facility.
"The defendant committed corruption along with Boediono, Miranda Swaray Goeltom, Siti C. Fadjriah, Budi Rochadi, Robert Tantular and Harmanus H. Muslim to grant the short-term loan facility," KPK prosecutor K.M.S. Roni said while reading the indictment.
Miranda, Siti and Budi all served as Bank Indonesia deputy governors during the bailout.
Robert was a former co-owner of the bank, who is now serving a nine-year jail term for banking violations, while Harmanus was the bank's president director.
Roni has accused Boediono of playing a role in granting the short-term loan.
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