The Bank Century Plot Thickens
    Category: Column By : Taufik Darusman Read : 1276 Date : Saturday, October 12, 2013 - 07:16:29

    The KPK has shifted gears and is finally probing the Bank Century scandal—three years after legislators, in 2010, provided the antigraft body with documents suggesting irregularities surrounding the bank's Rp 6.7 trillion ($670 million) bailout in late 2008. KPK chief Abraham Samad last month asserted that Budy Mulya and Siti Chalimah Fadjrijah will be brought to trial before the end of the year. Both were deputies of Vice President Boediono when he was the governor of the central bank, Bank Indonesia (BI).

    It is not clear why the KPK put only Mulya and Fadjrijah in its crosshairs. For the decison to bail out Century was taken, in October 2008, by all members of BI's board. As Fadjrijah may not appear in court at all—she is incapacitated by a stroke—putting only Mulya on trial is presumably a tactical decision: his testimony may eventually lead others to face the same fate. In any case, Boediono was excluded thanks to his status as the vice president, says Samad.

    It is unclear why the KPK should even be looking into the case. The only clue is a statement by Pramono Anung, the deputy speaker of the House of Representatives, who said the bailout reeks of abuse of power as it caused the state to lose Rp 6.7 trillion. Well, not really, for the government now owns Century, now named Bank Mutiara, and it is up for sale. 

    Sure, many find it strange for BI to bail out a small lender like Century in order, it claims, to prevent a systemic adverse effect on the nation's banking system. At the time of the bailout, Century's assets stood at 0.72% of all national bank assets. Many also question BI's wisdom in changing its ruling on capital adequacy ratio (CAR) so that Century could receive a short-term loan (FPJP). But in fairness, it is the BI's mandate to take whatever action it deems necessary, no matter how questionable it may be as the Century bailout seems to suggest.

    The Bank Century case could open a Pandora's box as it may reveal “irregularities” at the highest level. For here is a government decision to save an ailing bank with an initial Rp 632 billion FPJP that within months rose to Rp 6.7 trillion without the knowldge of then Finance Minister Sri Mulyani—and no clear record where the money went. When the House's Special Team on Bank Century (Pansus) asked her who was responsible for the final bailout figure, she shrugged and said: “Ask BI officials.” Later, she said she had been duped by BI officials (over the actual fund amounts).

    Here's also is a bank bailout that was partly based on what was later revealed to be Boediono's contradicting assessments of the situation. In October 2008, he said the country faced a different crisis than it had during the 1998 Asian financial crisis. A year later he would insist to Pansus that the situation was exactly the same.

    In a perfect world, this scandal would probably have brought down a government. But not here, if one gives credence to foreign reports saying Bank Century bailout funds were used to help President Susilo Bambang Yudhoyono get re-elected in 2009. His running mate was Boediono, who neither had the support nor money to be one heartbeat away from the presidency but was instrumental in saving Century—the plot thickens.