perspektif online, 29 November 2009
The first BC case (Bibit-Chandra) is now at the beginning of the end, and now the second BC case (Bank Century) is at the end of the beginning. There are dangerous parallels between the two BC cases. In both cases, legitimate concerns about the public interest have sparked popular opinion. Public opinion is flexing its muscles with the effective use of social media on the internet.
Facebook and blogs and instant messaging tools have given people access to public debate on a scale never before experienced. State-of-the-art television coverage presents serious issues as reality shows that arouse emotions exceeding understanding of the technicalities. Television and internet media help to educate and empower the public and present the main parallel between the two cases. But there are important differences.
The Bibit-Chandra case is largely about moral issues of sincerity and duty versus greed and conspiracy. The Bank Century case is not that simple. It is very technical involving banking and economic crisis management. Yet public euphoria is carrying over energy from the Bibit-Chandra case to the Bank Century Case. Following the 1.4 million facebook votes in support of Bibit-Chandra, there is a motion of no confidence against the President. While it is too serious, it would be dangerous to ignore the parallel. People power is good, but not if it is driven by the greed of politicians and big money from business people who need to ensure their privileges. The SBY coalition is broad but not deep. Many ostensible SBY supporters stand to gain from the removal of the two icons of finance, even at the risk of destabilizing the government.
The Bibit-Chandra case is at the beginning at the end. The presidential speech of November 16 put forward mixed signals., but actually it was a clear pronouncement. It was presidential in language but poor in timing, too little too late. It is a “do it yourself” solution which demanded the Police Chief and the Attorney General to follow up. The cabinet has formed a task force to clean up the justice system. The public is invited to be more confident in demanding broad reforms.
The Bank Century case is at the end of the beginning, an issue which lay dormant for a year until the political landscape changed. Bank Century fell because of fraud perpetrated by its owners and accomplices who bled its treasury to death. The government has dealt with this part of the crisis by prosecuting the criminals, recovering the stolen money and taking control of the bank. The choice was then whether to let Bank Century disappear or to salvage the remains.
Imagine a house run by owners living a life of lust and sin. Suddenly they went wild, took out valuables and left the house burning. Authorities had to move fast and decide what to do with the house. They could let it burn to ashes, or they could put out the fire and rescue the house. Had the house stood alone on empty land, it could be left to burn. But the house is in a densely populated area. The fire could easily spread to houses next door to eventually burn out the whole area. Fire spreads easily in some conditions, and that was a time of an extremely volatile condition.
At the height of the economic crisis in November 2008, the Indonesian treasury faced a dilemma. If they let Bank Century fold, the domino effect could threaten to lead other financial institutions into bankruptcy and trigger a market crisis of confidence. Hank Paulson who was then US Treasury Secretary faced the same dilemma and chose to let Lehman Brothers fall. That was followed by a deluge of financial failures which left the US economy reeling, sending an urgent message to the rest of the world. Neighboring countries like Singapore, Malaysia, and Australia immediately imposed a blanket guarantee on their banks. Indonesian businessmen implored our government to do the same, but the cost would be prohibitive. Instead, Indonesia chose to rescue banks that are deemed to pose systemic risk on the banking system. Bank Century was brought to the Committee for Stabilization of the Financial Sector (KSSK) which decreed a takeover, entrusting it to the Deposit Insurance Agency (LPS). Depositors money was safeguarded as Rap 4.3 trillion in deposits were rescued from the bank. This scenario represented the role of the Department of Finance, center stage but brief. The drama then follows.
Politicians and business people who supported the Bank Century bailout in November 2008 are protesting it now in November 2009. After the elections sidelined some political parties and politicians, rumors started to be spread that the bank’s money was withdrawn by depositorsclose to SBY. There were allegations that some law enforcement officers lent a hand in persuading the bank to issue the money. How much was withdrawn by whom, nobody knows. It is certainly useful to investigate these cash flows, and the legality of the ‘hak angket’ by the DPR is sound. But the spirit remains to be watched vigilantly as many in the anti-government cabal might have questionable motives. People who were thwarted by treasury Minister Sri Mulyani in their attempts to abuse the stock market, tax laws, and illegal acquisitions would breathe with relief if she were replaced by a Treasury Minister more tolerant of their schemes. Government officials who were removed in Sri Mulyani’s lauded reform measures have reappeared in new powerful positions. The State Audit Agency (BPK) stated that the government has incurred losses in the Bank Century case, when there are clearly none. In fact, it would have been more expensive to let the bank fail as the government would still have to pay Rp 5.5 T, plus the cost of other banks failing. The incremental cost of the bailout is “only” Rp1.2 T, an amount well within the possibility of recovery upon divestation.
As for motives, experts and reporters can readily testify to the integrity of Sri Mulyani and Boediono. The newspaper “Emerging Markets” awarded the title of Best Finance Minister in Asia upon Sri Mulyani. “VIVANews” reported that Sri Mulyani was recorded having solid performance in the last five years. She has been awarded the best Asia's finance minister for several times. "Sri Mulyani is not only well-known among the international community. Everyone in the banking and monetary circle respects the woman," adding that she was reappointed as Finance Minister based on progress achieved in areas like economic growth, investor trust, and ratings in Indonesia, and on the opinions of her held by foreign investors.
But the dangerous parallel to the use of people power in the other BC case is that voices of reason could be drowned out by the cacophony of greed and political motives. It is a time to be vigilant, as the damage will not be limited to the two government officials having the highest public trust, but to the President himself and the stability of our economics.
Source: perspective online
The first BC case (Bibit-Chandra) is now at the beginning of the end, and now the second BC case (Bank Century) is at the end of the beginning. There are dangerous parallels between the two BC cases. In both cases, legitimate concerns about the public interest have sparked popular opinion. Public opinion is flexing its muscles with the effective use of social media on the internet.
Facebook and blogs and instant messaging tools have given people access to public debate on a scale never before experienced. State-of-the-art television coverage presents serious issues as reality shows that arouse emotions exceeding understanding of the technicalities. Television and internet media help to educate and empower the public and present the main parallel between the two cases. But there are important differences.
The Bibit-Chandra case is largely about moral issues of sincerity and duty versus greed and conspiracy. The Bank Century case is not that simple. It is very technical involving banking and economic crisis management. Yet public euphoria is carrying over energy from the Bibit-Chandra case to the Bank Century Case. Following the 1.4 million facebook votes in support of Bibit-Chandra, there is a motion of no confidence against the President. While it is too serious, it would be dangerous to ignore the parallel. People power is good, but not if it is driven by the greed of politicians and big money from business people who need to ensure their privileges. The SBY coalition is broad but not deep. Many ostensible SBY supporters stand to gain from the removal of the two icons of finance, even at the risk of destabilizing the government.
The Bibit-Chandra case is at the beginning at the end. The presidential speech of November 16 put forward mixed signals., but actually it was a clear pronouncement. It was presidential in language but poor in timing, too little too late. It is a “do it yourself” solution which demanded the Police Chief and the Attorney General to follow up. The cabinet has formed a task force to clean up the justice system. The public is invited to be more confident in demanding broad reforms.
The Bank Century case is at the end of the beginning, an issue which lay dormant for a year until the political landscape changed. Bank Century fell because of fraud perpetrated by its owners and accomplices who bled its treasury to death. The government has dealt with this part of the crisis by prosecuting the criminals, recovering the stolen money and taking control of the bank. The choice was then whether to let Bank Century disappear or to salvage the remains.
Imagine a house run by owners living a life of lust and sin. Suddenly they went wild, took out valuables and left the house burning. Authorities had to move fast and decide what to do with the house. They could let it burn to ashes, or they could put out the fire and rescue the house. Had the house stood alone on empty land, it could be left to burn. But the house is in a densely populated area. The fire could easily spread to houses next door to eventually burn out the whole area. Fire spreads easily in some conditions, and that was a time of an extremely volatile condition.
At the height of the economic crisis in November 2008, the Indonesian treasury faced a dilemma. If they let Bank Century fold, the domino effect could threaten to lead other financial institutions into bankruptcy and trigger a market crisis of confidence. Hank Paulson who was then US Treasury Secretary faced the same dilemma and chose to let Lehman Brothers fall. That was followed by a deluge of financial failures which left the US economy reeling, sending an urgent message to the rest of the world. Neighboring countries like Singapore, Malaysia, and Australia immediately imposed a blanket guarantee on their banks. Indonesian businessmen implored our government to do the same, but the cost would be prohibitive. Instead, Indonesia chose to rescue banks that are deemed to pose systemic risk on the banking system. Bank Century was brought to the Committee for Stabilization of the Financial Sector (KSSK) which decreed a takeover, entrusting it to the Deposit Insurance Agency (LPS). Depositors money was safeguarded as Rap 4.3 trillion in deposits were rescued from the bank. This scenario represented the role of the Department of Finance, center stage but brief. The drama then follows.
Politicians and business people who supported the Bank Century bailout in November 2008 are protesting it now in November 2009. After the elections sidelined some political parties and politicians, rumors started to be spread that the bank’s money was withdrawn by depositorsclose to SBY. There were allegations that some law enforcement officers lent a hand in persuading the bank to issue the money. How much was withdrawn by whom, nobody knows. It is certainly useful to investigate these cash flows, and the legality of the ‘hak angket’ by the DPR is sound. But the spirit remains to be watched vigilantly as many in the anti-government cabal might have questionable motives. People who were thwarted by treasury Minister Sri Mulyani in their attempts to abuse the stock market, tax laws, and illegal acquisitions would breathe with relief if she were replaced by a Treasury Minister more tolerant of their schemes. Government officials who were removed in Sri Mulyani’s lauded reform measures have reappeared in new powerful positions. The State Audit Agency (BPK) stated that the government has incurred losses in the Bank Century case, when there are clearly none. In fact, it would have been more expensive to let the bank fail as the government would still have to pay Rp 5.5 T, plus the cost of other banks failing. The incremental cost of the bailout is “only” Rp1.2 T, an amount well within the possibility of recovery upon divestation.
As for motives, experts and reporters can readily testify to the integrity of Sri Mulyani and Boediono. The newspaper “Emerging Markets” awarded the title of Best Finance Minister in Asia upon Sri Mulyani. “VIVANews” reported that Sri Mulyani was recorded having solid performance in the last five years. She has been awarded the best Asia's finance minister for several times. "Sri Mulyani is not only well-known among the international community. Everyone in the banking and monetary circle respects the woman," adding that she was reappointed as Finance Minister based on progress achieved in areas like economic growth, investor trust, and ratings in Indonesia, and on the opinions of her held by foreign investors.
But the dangerous parallel to the use of people power in the other BC case is that voices of reason could be drowned out by the cacophony of greed and political motives. It is a time to be vigilant, as the damage will not be limited to the two government officials having the highest public trust, but to the President himself and the stability of our economics.
Source: perspective online
