Golkar Seen Pushing Back With Century

JakartaGlobe, 26 February 2011

After its failed push for a special inquiry into corruption in the tax office, the Golkar Party has come up with a new issue: the leadership of the Indonesian House of Representatives’ Bank Century bailout monitoring team.

Analysts and critics, though, say Golkar’s reviving of the Century issue could be its response to threats by the Democratic Party to kick it out of the ruling coalition over the tax inquiry push.

Boediono Completes Questioning, More on Sri Mulyani

tempointeractive, 1 May 2010

The Corruption Eradication Commission said it has concluded Bank Century bail out probing on Vice President Boediono and will not repeat questioning on the former central bank governor.

Deputy chairman of the commission Mochammad Jasin said “report from the (investigating) team said, the probe is finished, but there will be more session with Finance Minister Sri Mulyani. Jasin said the commission adhered to efficiency and decided to complete all Boediono's part after the vice president was difficult to be approached on the scheduled questioning day at his office, and fled to the State Palace to consult with President Susilo Bambang Yudhoyono before he eventually ready for the session.

Four investigators spent almost 6 hours in the session with Boediono yesterday, while another team completed questioning Sri Mulyani in two and a half hours.

Questioning on the two officials has drawn controversy as the two refused to undergo the probe at the anti-graft commission's office and requested for questioning at their respective offices.

The next round for Sri Mulyani is set for Tuesday next week, which Jasin said probably to be held at the Finance Department.

Source: tempointeractive

Jakarta Official Defends Bailout

The Wall Street Journal, 10 December 2009

Indonesian Finance Minister Sri Mulyani Indrawati said a parliamentary probe into the government's handling of a $700 million bank bailout last year is an attempt by rival politicians to unseat her because of her efforts to overhaul the country's bureaucracy.

Ms. Sri Mulyani and Vice President Boediono have become subjects in recent weeks of a parliamentary investigation into the bailout in November 2008 of Bank Century, a small Indonesian lender. As finance minister, Ms. Sri Mulyani oversaw the bailout; Mr. Boediono was central-bank governor at the time.

Ms. Sri Mulyani said in an interview that failing to guarantee Bank Century's deposits at a time of huge capital outflows from emerging markets could have sparked panic among depositors of other banks. "I felt like what I did was the right thing for the country," she said.

Mr. Boediono has also defended the bailout as necessary to stop wider panic in the banking sector.

The head of the investigation, Idrus Marham, who is secretary-general of the Golkar Party, said on Wednesday the investigation was backed by all major political parties and wasn't targeted at Ms. Sri Mulyani.

"We didn't do this to target Sri Mulyani. The focus is to get data and facts" on the bailout, Mr. Marham said.

He declined to comment on the specifics of the investigation, which began this month and he said will take two months to complete.

Mr. Marham and other Golkar Party lawmakers who are leading the probe claim the bailout of Bank Century was done without legal authority and without proving a capital injection was needed to stave off a run on other banks. Some politicians have said the bank wasn't eligible for a rescue because its problems stemmed from fraud that led to the bank's near-collapse. One of the bank's former owners, Robert Tantular, was sentenced in September to four years in prison for fraud.

Ms. Sri Mulyani said the bailout was legal.

A former university economics professor and International Monetary Fund senior executive, Ms. Sri Mulyani is respected by many foreign investors for her role in managing Indonesia's economy, which has included efforts to weed out endemic corruption.

She said she believed the probe was an attempt to discredit her by politicians that oppose her reform agenda, notably leaders of the Golkar Party, including Chairman Aburizal Bakrie, a billionaire businessman and former cabinet member in President Susilo Bambang Yudhoyono's first-term administration.

Ms. Sri Mulyani said tensions between her and Mr. Bakrie date to last year when she opposed the closure of Indonesia's stock exchange amid a run on companies controlled by Mr. Bakrie. Mr. Bakrie, one of whose coal-mining firms accounted for a third of daily turnover on the bourse at the time, ordered the closure, she said.

Mr. Bakrie, through a spokesman, declined to comment on the closure.

The finance ministry also last year imposed a travel ban on a number of coal-mining executives, including some from Mr. Bakrie's companies, after a dispute over the refusal of the companies to pay royalties on the sale of coal to the government.

"Abuizal Bakrie is not happy with me," she said. "I'm not expecting anyone in Golkar will be fair or kind to me" during the probe.

Mr. Bakrie denied there was any problem between himself and Ms. Sri Mulyani.

Many analysts say the claim that the bailout was illegal appears to be without merit.

"Under the circumstances, what Sri Mulyani and Boediono did was to prevent a crisis," said Umar Juoro, chairman of the Center for Information and Development Studies, a Jakarta-based think tank.

Other government officials involved in the bailout have supported Ms. Sri Mulyani. The head of Indonesia's Deposit Guarantee Agency told an Indonesian magazine, Gatra, last week that the rescue was lawful.

Some senior Golkar politicians have in recent weeks publicly called for Ms. Sri Mulyani and Mr. Boediono to hand their jobs to deputies while the investigation is under way.

President Yudhoyono won re-election to a second term this year on a graft-busting platform. Indonesia's natural-resources-powered economy is forecast by private economists to grow by more than 4% this year, a healthy clip compared with many developed economies, but economists question whether that growth will be sustained if the country can't get a handle on corruption -- a major deterrent to foreign investment here, which lags behind India and China.

Popular dissatisfaction with corruption continues to mount. On Wednesday, students armed with rocks and wooden planks clashed with riot police as more than two dozen rallies involving thousands of protesters broke out as part of annual events designed to mark International Anticorruption Day.

Any signs of an intensification of efforts to oust Ms. Sri Mulyani would also likely spook foreign investors who have applauded her antigraft drive and management of the budget. Since taking up her job at the finance ministry in 2005, she has overseen a reduction in public debt to 30% of GDP from 60%, making it easier for Indonesia to sell debt to foreign institutional investors, bankers say.

"There's no way you could fill the credibility gap that would be created by her departure," says David Fernandez, a managing director of J.P. Morgan in Singapore who heads the bank's emerging-Asia research.

Indonesia is serious about pushing through overhauls to clear up what Mr. Yudhoyono has referred to as a "judicial mafia" of corrupt officials in the courts, attorney general's office and police, Ms. Sri Mulyani said. But she acknowledged that Mr. Yudhoyono's first term was a "honeymoon" for her.

"I should become more realistic. I'm expecting a nasty battle if I'm going to do the reform," she said.

Priorities, Ms. Sri Mulyani said, include continuing to clean up her own ministry, where there is still corruption, and catching more tax cheats. Past efforts led by Ms. Sri Mulyani have included a war on graft in the tax office, greatly increasing the nation's tax base, and customs department.

Source: The Wall Street Journal

Indonesia Police To Deploy Thousands for Anti-graft Protest

channelnewsasia.com, 9 December 2009

Indonesia will deploy thousands of police to an anti-graft protest on Wednesday after President Susilo Bambang Yudhoyono warned that unnamed forces could hijack the rally to topple him, a spokesman said.

"There will be 10,000 police personnel deployed tomorrow in several spots that will be passed by demonstrators," Jakarta police spokesman Boy Rafli told AFP. Anti-riot police would be among those on hand to suppress any violence.

On the eve of the protest, Yudhoyono appealed for people to demonstrate calmly, saying his government was serious about tackling graft.

"I urge the people to celebrate the world anti-corruption day tomorrow in an orderly way... In the next five years I want the results of combating corruption to be one of the legacies of my administration," he said.

Indonesia's top security chiefs met on Monday to discuss a supposed threat to the country after Yudhoyono told a gathering of his Democratic party that the rally was a front for a "hidden political scenario".

Yudhoyono is under mounting pressure over corruption allegations that have besieged the administration since his landslide election victory in July on the back of promises of good governance and economic growth.

The softly-spoken ex-general has been slow to discipline the officials involved and has seemed out of touch with public anger over the endless stream of corruption scandals.

His taciturn exterior was shaken when he angrily rejected suspicions that money from a 6.7-trillion-rupiah (710-million-dollar) government bailout for a failed bank found its way into his campaign coffers.

Organisers of the anti-graft rally said the president was paranoid and called on him to join them rather than demonising a popular movement for justice.

Source: channelnewsasia.com

SBY Success Team Denies Receiving Century Funds

WASPADA online 09 December 2009

One of Susilo Bambang Yudhoyono (SBY)'s success teams, the "SBY for President Task Force", has officially denied receiving "even a single cent" of the controversial Bank Century funds.

"This is a formal clarification from us in view of the slanderous allegations that have seriously disturbed us," the Task Force's secretary general, Hencky Luntungan, said here on Tuesday (Dec.8).

Luntungan said the team was insulted by the slanderous statements spread by various parties that Yudhoyono's victory in the 2009 presidential election was helped by the flow of funds from Bank Century.

He said "not a single cent from other parties was received by Yudhoyono's success team except from SBY's party."

"We had our own funds for six months since the preparation, consolidation across Indonesia, until the end of the presidential election," Luntungan said.

He added that if it was eventually proven that funds from Bank Century had in reality flown into the purses of certain individuals, the matter could be legally processed.

"Remember, if the funds were received by individuals, we will support efforts to process the matter legally," Luntungan said.

Asked about the plan of a number of civil society organizations to hold a peaceful rally on World Anti corruption Day on Wednesday, Dec 9, 2009, Luntungan said his team would support it "one hundred percent."

"We will support it so long as it is not conducted in anarchic manner," said the functionary of the Indonesian National Students Movement Presidium.

He said the mass rally planned for Wednesday was part of the fair practice of democracy for people's welfare.

Source: WASPADA online

Thousands Urge Sharia Law to Stem Indonesia Graft

jaknews.com, 7 December 2009

Thousands of hardine Muslim protesters staged rallies in Indonesia on Sunday (6/12) urging the government to apply Islamic law as the only way to tackle widespread corruption.

Members of Hizbut Tahrir demonstrated in several cities including the capital Jakarta, venting anger at a 700-million-dollar bank bailout at the center of a corruption scandal that has put high-level officials under fire.

In Jakarta, thousands of protesters took to the streets with their families and children, carrying banners condemning the capitalist system as the root of corruption.

"The Bank Century scandal proves the failure of capitalism system," read one big banner. "By adopting sharia under Islamic caliphate, Indonesia is free from corruption," said another.

Lawmakers are probing allegations of corruption linked to the bailout last year of Bank Century after the country's top auditor found strong indications of "violations."

"The capitalist system has ruined our economy. That's the source of all problems in our country," Hizbut Tahrir spokesman Muhammad Ismail Yusanto declared at the rally.

Hundreds of members of the group also rallied last week on World AIDS Day to demand the implementation of sharia law to prevent the spread of HIV rather than condom use.

Nearly 90 percent of Indonesia's 234 million people are Muslim and most practice a moderate form of the religion

Source: jaknews.com

News Focus: Observers Pessimistic About House Inquiry Committee

ANTARA News, 7 December 2009

The House Special Inquiry Committee that will investigate a controversial Rp6.7 trillion bailout provided by the government for Bank Century might not work maximally, observers say. Most of the lawmakers grouped in the 30-member inquiry committee came from political parties which have signed political contracts of support with the government. After all, the political parties are involved in cartel politics that enabled them to seek and provide mutual protection, they say.

"I doubt whether the committee would perform well and effectively because it is led by a chairman who comes from a party that has signed a political contract as a government supporter," Arbi Sanit, political observer of the University of Indonesia (UI) said on Sunday.

Pessimism is also expressed by Burhanuddin Muhtadi, researcher of the Indonesia Survey Institute (LSI). He said that political parties in Indonesia were accustomed to cartel politics.

"I am pessimistic about the fate of the committee, even as of the very beginning, because many political parties in Indonesia had been trapped the cartel politics," Muhtadi said.

The House of representatives formed the inquiry committee on Friday after hearing a report of the State Audit Board (BPK) on its investigative audit of Bank Century that there was a suspected effort to engineer additional bailout funds (PMS) for the bank.

The case came up to the surface when Bank Century almost collapsed some time ago after its assets worth Rp11 trillion were transferred and stashed overseas by major shareholder Robert Tantular.

In order to help the ailing bank, the government provided it with bailout funds amounting to Rp6.7 trillion without the approval of the House of Representatives (DPR).

Arbi Sanit said that he had doubts whether the newly formed House Inquiry Committee would perform maximally in probing into the Bank Century bailout scandal because most of the committee members were political parties which had signed contracts with the government.

The 30-member committee appointed Muhammad Idrus Marham of the Golkar Party in its meeting on Friday (Dec 4.). The Golkar Party is one of the political parties which coalesced with the ruling Democratic Party in the House.

"As an executive of the party, though there is a difference of opinion, he would not adopt a stance that is different from the government`s," Sanit said. He predicted that the voice of the parties in coalition in deciding the result of the inquiry committee, if it reached through a voting mechanism, would be inclined to support the government.

If the final results of the inquiry committee had been decided in this way, the public hope for the revelation of the real problem with the Bank Century case would not be satisfied, he said.

The same voice was also aired by LSI researcher Burhanuddin Muhtadi. He said he was pessimistic that the House Special Inquiry Committee would be able to reveal the truth with regard to the Bank Century bailout case.

"I became pessimistic about the committee since the very beginning because the political parties in Indonesia had been trapped in cartel politics," he said.

He said that even if it was chaired by lawmaker Gayus Lumbuun of the Indonesian Democratic Party of Struggle (PDIP) faction, the House Inquiry Commission would still not be free from political intrigues.

"This is because each of the political parties in the House already has the ace against their political opponents," he said.

According to Muhtadi, a PDIP cadre was also implicated in a bribery case with former Bank Indonesia (BI/central bank) senior deputy governor Miranda Goeltom.

"This is a part of old cases with Indosat, the sale of a VLCC tanker, and presidential instruction (issued by then President Megawati Soekarnoputri) No. 8 / 2002 that stopped the investigation of at least ten suspects in the BI liquidity assistance case," Muhtadi said.

The presidential instruction arranged the release and discharge which stated that debtors of the National Bank Restructuring Agency (BPPN) were exempted from debts.

Muhtadi said Golkar also faced the same thing where many old cases involved its cadres and had the potential to be used as a means of lobbying a political barter. The financial scandals which implicated political brokers involved many political parties.

They usually kept silent if there was a `just` distribution of money interest based on the proportion of their seats in the House of Representatives (DPR).

"Cartel politics leads lawmakers to mutually provide protection such as those in the cases of Bulogate 2 and Bank Bali sometime in the past," Muhtadi said. Thus, the only most probable achievement the House Inquiry Committee could make is to find a scapegoat or to determine that the Bank Century case is a civil case, he said.

He said that judging from the composition of the inquiry committee leadership and the interest of the House factions, there was a big possibility that the inquiry would run aground before reaching its goals.

In the meantime, a number of student activists over the weekend also expressed fear that the House inquiry into the Bank Century case could run aground. "There is an indication the inquiry will run aground before it reaches its objectives," Bambang M Fajar, chairman of the Muslim Student Association (HMI), said.

He said many members of the special inquiry committee were not the initiators of the petition. They even fought to chair the committee while they actually had given little to support the handful of legislators who had led the House inquiry initiative since the beginning.

The same concern was also expressed by Heni Lestari, presidium chairwoman of the Women Action Wing of the Indonesian Nationalist Student Movement (GMNI).

She regretted the success of certain political parties in including their cadres in the committee. "Therefore, there is no choice for us, elements of all community movements, but to launch mass rallies to guard the investigation process of the House committee," she said

Source: ANTARA News

Legislator Calls for Disclosure of Bank Century Funds

ANTARA News, 3 December 2009

A member of House Commission III dealing among others with legal affairs has called for the disclosure of transactions worth more than Rp2 billion at former Bank Century. "We have asked the Center of Financial Transaction Analysis and Reporting (PPATK) to disclose the flow of funds of former customers of Bank Century making transactions worth more than Rp2 billion. Where their funds have gone to," the legislator, Bambang Soesatyo, said at a hearing with PPATK chairman Yunus Husein here on Wednesday.

The case of former Bank Century was centered on the injection of Rp6.7 trillion by the government last year to bail out the bank facing liquidity problems at the time.

Bamband Soesatyo said according to the Supreme Audit Board (BPK) there were criminal indications with regard to the flows of funds from November 2008 to April 2009.

He said if PPATK would disclose the suspicious flows of funds the results could be confronted with those allegedly receiving the funds from the bank.

Bambang had also asked the PPATK to conduct tests to validate the accounts of customers who had disbursed for a big amount of cash.

"If the PPATK would disclose the transactions and conduct validation the results could be used by the Team of Nine to verify their data," he said.

Yunus Husein said that PPATK would only do it upon a request and the funds it would trace must be specific in terms of the names of the owner and when the transactions were done.

If the Team of Nine initiators for the exercise of the House of Representatives` (DPR) inquiry right asked for it, they must submit the names and dates of transactions, Yunus said.

"We are ready to help the team but in what area we should help," he said. Yunus also asked the team to submit their application in a written form and in detail so that the transactions to be traced were specific.

He said the number of bank transactions reached tens to hundreds of thousands a day and therefore their demand must be made specific and clear.

He said the PPATK had already traced the flow of funds from 51 customers of the bank upon the BPK`s order. "The result is we have found 59 transactions worth suspicion involving Rp39 million to Rp20 billion in funds totalling Rp146 billion. We have reported the findings to BPK," he said.

The House of Representatives recently decided to set up a special committee to investigate the case.

Source: ANTARA News

House To Ask Parties To Prove Innocence In Century Case

The Jakarta Post, December 3, 2009

The House of Representatives’ inquiry committee will shift the burden of proof to certain parties who are suspected of having received part of the Rp 6.7 trillion (US$712.32) bailout funds injected to bank Century. Legislator Gayus Lumbuun, a member of the inquiry committee, said Thursday the method was commonly used in investigating corruption-related cases.

"Under this method, any suspicious individual can be summoned to explain about his or her wealth and the sources of their fortune," Gayus told The Jakarta Post. He added the method would help the committee overcome difficulties in tracing the distribution of the bailout funds.

The Financial Transactions Report and Analysis Center (PPATK), the only institution with authorities to collect transaction records from all banks in the country, has expressed difficulties in finding transaction data in Bank Century, which has been rebranded as Bank Mutiara.

"We can hardly collect the data of all the transactions made by Bank Century's depositors in short time, as the bank had more than 8,500 customers," PPATK Chairman Yunus Husein said recently.

Inquiry committee member Bambang Soesatyo said he had secured information about some names who were allegedly involved in the scandal.

"The assets of these people increased considerably during the election campaign period between January and April," he said, adding that the people might be linked with a particular political party.

Bambang urged the PPATK to reveal at least all over-Rp 2 billion transactions during the period to match this data.

Source: The Jakarta Post

Dangerous Parallels Between the Bibit-Chandra and Bank Century Cases – and Important Difference

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

Mulyani Ready To Provide Clarification To The DPR

tempointeractive, 1 December 2009

The Minister of Finance, Sri Mulyani Indrawati, is ready to provide clarification to the DPR right of inquiry committee regarding the Century Bank controversy. “As long as we consider this matter objectively,” said Sri Mulyani in Jakarta, Monday (30/11).

Similar to President Susilo Bambang Yudhoyono, Sri has agreed to discuss the accountability of Century Bank handling through political means if the DPR wishes so.

Sri added that the general public will easily understand why the government considered Century Bank as a failed bank that could cause systemic impact and had to be saved in November, last year.

The reason is that the problem occurred 12 months ago. “It’s different from the 1997-1998 crisis ten years ago.”. Furthermore, several economic observers at that time stated that the economic crisis was near.

The Century Bank controversy arose after the Financial Sector Stability Committee (KSSK) decided to rescue the bank in November 2008. The rescue was performed through the Deposit Insurance Agency (LPS), which disbursed Rp6.7 trillion in bailout funds.

Responding to suspicions about the whereabouts of the flow of funds, Sri said that the LPS and the Financial Transactions Reporting and Analysis Center (PPATK) could provide information on this. “The funds can be accounted for,” she said.

Source: tempointeractive

President: The Rumor is Really Outrageous!

KOMPAS.com, 1 December 2009

President Susilo Bambang Yudhoyono confirms that the rumors of Century Bank funding his political team are completely false. It is defamation against him.

"I, with all my conscience and reasoning state, that the rumors of Century Bank funding my political team is completely false," he said during the National Teachers' Day 2009 and the 64th anniversary of the Indonesian Teachers' Association, Jakarta, Tuesday afternoon.

The president stated that there has never been any evidence of such accusations. "Please verify the truth of the rumors. Such rumors are outrageous slanders and must be settled so that justice is served."

According to the president, the people deserve transparent and true information regarding the Century Bank case. The president supports the process to clarify the case, which has been of great public interest.

"I'm concerned with the circulating false rumors. I consider them all slanders, and they are outrageous."

Source: KOMPAS.com

Chief Minister Reports NGO To police For Defamation

ANTARA News, 1 December 2009

Coordinating Minister for Political and Security Affairs Djoko Suyanto on Tuesday reported a non-governmental organization to the Jakarta Police for defamation.

"I will tell you later, after submitting my report," the chief security minister said before entering the public service center of the Jakarta Police headquarters on Tuesday.

On the occasion, Djoko Susanto was accompanied by Coordinating Minister for Economic Affairs Hatta Radjasa, Sports and Youth Affairs Minister Andi Mallarangeng, the Democratic Party legislator Eddie Baskoro Yudhoyono, and lawyer Amir Syamsuddin.

Earlier, a number of journalists received information about a number of state officials who were going to report to police a defamation case in connection with allegations a non-governmental organization had made at a press conference on Monday about the flow of Bank Century funds.

In the meantime, Andi Mallarangeng confirmed he was reporting a certain non-governmental organization to the police.

The names of Djoko Suyanto, Hatta Radjasa, Andi Mallarangeng, Eddie Baskoro and a number of institutions and political parties were mentioned by the West Java - Jakarta Activists Network as the parties that had received Rp1.8 trillion in Bank Century funds.

The non-governmental organization also mentioned the names of the three brothers Andi Mallarangeng, Rizal Mallarangeng and Choel Mallarangeng as parties that had received Bank Century funds.

Source: ANTARA News

PPATK Needs Legal Basis To Give Information

ANTARA News, 1 December 2009

The Indonesian Financial Transactions Reporting and Analysis Center (PPATK) needs a strong legal basis before it could provide information needed in the framework of the implementation of a House inquiry committee, its chief said.

"We need a strong and clear legal basis in providing such information," PPATK Chief Yunus Husein said here on Tuesday.

He said in providing information needed for the implementation of a House inquiry into the Bank Cenutry bailout, he had never received any pressure from any body or any party.

Husein said PPATK fully supported the auditing of Bank Century case by the State Audit Board (BPK) so that from the beginning it provided information needed by the BPK in its audit.

Therefore, he said, PPATK also supported the inquiry by the House of Representatives (DPR) based on the regulations in force.

In response to a report circulating among the public that the bailout funds for Bank Century had flown to certain individuals and institutions, he clarified that PPATK had no such information and had never provided information about funds flows to any one.

Husein said that the people should understand that information owned by PPTAK was confidential in nature based on articles 10A and 17A of Law No. 25 / 2003 on Money Laundering.

Source: ANTARA News

Former Indonesian VP to Comment on Century

VIVA News, 30 November 2009

The inquiry process in Bank Century case has been intense. On December 1, 2009, the House of Representatives (DPR) will be holding a plenary meeting to discuss about the rights to inquiry.
The House members, who become the initiator of the right, are preparing to summon some of the people related to the bailout process of the bank. Those include Finance Minister Sri Mulyani and Vice President Boediono who during the bailout was serving as the Governor of Indonesian Bank.

Bambang Soesatyo, the right initiator from Golkar Party, is also planning to invite former VP Jusuf Kalla to explain on how the bailout was carried out.

Jusuf Kalla, who is currently living in Makassar, South Sulawesi, has confirmed his attendance. “I would definitely come,” he said to Wens Manggut from VIVAnews over the phone.

Kalla promised to explain everything he knows about the bailout process.

When the Century bailout was done, you were still the Vice President. What do you know about the process?

I don’t know much about the process. But I do know.

Some of the initiators of Century’s right to inquiry are planning to invite you because you are considered informed of the chronology of the case?

If I am summoned by the House, I would definitely come. I can assure you that I will be there. It’s a citizen’s obligation to fulfill the House’s summons. If I don’t, I could be accused of violating the law. I don’t want to be dragged out of Makassar (Laughs)

What would you explain to the House members during the inquisition?

It depends on the questions. I’ll answer to what will be asked. I’ll tell them what I saw and what I felt. I won’t tell them about the things that I don’t know about. If I don’t know, I’ll say so.

If you are to be asked, what do you know about the bailout process and money transfer related to Bank Century, what will your answer be?

I don’t want to imagine things. The Special Team hasn’t even been formed. The confirmation is still waiting for the results of the plenary meeting on December 1 and I’m still waiting for the summons.

How do you think the case should be solved?

We have the Supreme Audit Agency (BPK), an official government institution that we all recognized. Start from the 500-page BPK audit. Don’t start from the rumors. I think the key is the 500-page audit.

What needs to be examined in the audit?

I haven’t read it. But it has to be examined thoroughly. It needs to be dissected on what really happened so that it will be fair for everyone. I will explain only about the things that I know., If I am to be summoned.

Source: VIVA News

PPATK Spots 17 Recipients of Century Bailout Funds

The Jakarta Post, 28 November 2009

The Financial Transactions Report and Analysis Center (PPATK) has identified 17 recipients of potentially suspicious transfers from Bank Century, which received Rp 6.76 trillion (US$716.56 million) in bailout funds. As of Nov. 23, the PPATK recorded 50 suspicious transactions between accounts in Century to accounts in 10 other financial institutions, it said in a statement issued on Thursday.

"Existing analysis results show at least 17 recipients in the form of institutions and the other individuals," PPATK head Yunus Husein said. He said the results had been sent to the Supreme Audit Agency (BPK) for further examination.

Yunus said BPK had requested the PPATK to examine the transfer of funds from Century to accounts in 16 financial institutions, which involved 124 transactions and "more or less" 50 depositors. The BPK alleged there were some misappropriations of bailout funds.

Century, which has rebranded itself as Bank Mutiara, received a total of Rp 6.76 trillion in bailout funds between Nov. 24, 2008 and July 24, 2009 after it was decided that its collapse could cause a systemic threat to Indonesia's banking system. The total cost of the bailout reached more than ten times the initial estimate of Rp 632 billion, a figure which the government first used as the basis to decide to rescue the bank back on Nov. 21.

There is public speculation that Bank Century was saved because it held potential campaign funds in support of President Susilo Bambang Yudhoyono although the President has assured observers this was not the case.

Pressures are said to be mounting from politicians and protesters for Vice President Boediono (then central bank governor) and Finance Minister Sri Mulyani Indrawati to resign as they are deemed responsible for the decision.

The PPATK refused to name recipients of suspicious transfers to the public as this would violate the 2003 money laundering law.

Yunus also said there were some financial institutions that had yet to provide information and documents requested by the PPATK to track the transfer of funds due to "technical aspects of banking operations". He added that the PPATK had so far tracked to two or three layers of the transfer of funds out of the seven layers of transactions initially demanded by the BPK.

"PPATK doesn't have online access to the database of financial institutions, so to track funds it should request information on transfers to financial institutions, which takes time," said Yunus.

Bank Mutiara president director Maryono said Thursday that between November and December 2008 depositors withdrew a combined value of Rp 4 trillion from their accounts in Century. Maryono elaborated that Rp 2.2 trillion had been transferred to 8,250 small depositors, each valued under Rp 2 billion, with the remaining Rp 1.8 trillion being disbursed to 328 big depositors with an average value of Rp 5.6 billion per depositor.

"The depositor that withdrew the most was a state enterprise," Maryono said, refusing to say which state firm was involved. He refused to mention in what sectors the companies were. "But I can assure you that none of the funds was transferred directly to any politician or to the campaign team of any political parties," Maryono said.

Source: The Jakarta Post

Party Distrust May Derail Century Case

The Jakarta Post, 30 November 2009

The move by the House of Representatives to establish an inquiry committee to probe the Bank Century scandal could hit a dead end earlier than expected, with parties pursuing different interests. The stark differences are evident between the opposition block and the government’s coalition of parties, with even the latter experiencing conflicting interests.

The opposition, led by the Indonesian Democratic Party of Struggle (PDI-P), want a thorough investigation into the possible flow of funds from Century to President Susilo Bambang Yudhoyono’s inner circle.

The PDI-P’s Maruarar Sirait said his party would assign the most informed legislators to the inquiry committee to ensure the investigation would go all the way, and not just target Finance Minister Sri Mulyani and Vice President Boediono.
The coalition parties, however, have different objectives: mostly to increase their bargaining power and bring down Sri Mulyani or Boediono, who they see as stumbling blocks to their goals, analysts say.

Indonesian Survey Institute (LSI) analyst Burhanuddin Muhtadi said it would work in the coalition parties’ favor if either Mulyani or Boediono, or both, were dismissed in the Century fallout, as neither was well-liked by the parties.

“They’ll be happy if the investigation stops at Mulyani and Boediono, considering their strained relationship in the past,” he said as quoted by tempointeraktif.com.
The coalition partners include the Prosperous Justice Party (PKS), the National Mandate Party (PAN), the National Awakening Party (PKB) and the United Development Party (PPP).

The Golkar Party, meanwhile, will seize on the Century case to increase the bargaining power of its chairman Aburizal Bakrie, analysts say, as the Corruption Eradication Commission (KPK) is currently investigating a graft case that took place during his tenure as coordinating minister for the economy.

Aburizal is also seen a strong contender to contest the 2014 presidential election.
Analysts also believe Aburizal will use the Century case to attack Mulyani, who once refused to intervene when his coal mining giant Bumi Resources took a pummeling in the stock market.

Aburizal, however, has denied all speculation that he is out for revenge against Mulyani. “We need to watch out for possible sabotage from inside the inquiry team,” said Golkar legislator Bambang Soesatyo, referring to the Democratic Party.
Ruhut Sitompul, from Yudhoyono’s Democratic Party, said his party would not block the investigation by creating backroom deals with other parties, accusing the PDI-P and Golkar of having ulterior motives.

“I guarantee the Democratic Party doesn’t have any political deals in the case,” he said, ignoring the fact that the party had initially opposed the inquiry. The PKS is considered the most undecided coalition member, but PKS lawmaker Mahfud Siddiq said the party fully supported the inquiry.

“We want to make the Century case as clear as possible. We don’t want the public to think that coalition parties also received funding from Century,” he said. Political analyst Arbi Sanit said all parties were after something through the guise of the inquiry, particularly the Democratic Party, which he said wanted to protect Yudhoyono.

“The party only agreed on the inquiry as long as it didn’t touch their boss, and the coalition parties are playing along because they need to protect their interests in the government,” he said.
Source: The Jakarta Post

Yudhoyono To Address The Nation As Corruption Scandals Spread

The Sydney Morning Herald, smh.com.au, November 24, 2009

Indonesia's Vice-President, Boediono, is under intense pressure over his role in the $720 million bail-out of a bank linked to donors who supported the election campaign of his running mate, President Susilo Bambang Yudhoyono. The fall-out from the rescue of Bank Century last year is one of a series of corruption scandals buffeting Dr Yudhoyono, who was due late last night to address the nation on the graft crisis.

A report released yesterday by Indonesia's Supreme Audit Agency (BPK) found the country's central bank - headed by Boediono at the time - provided incomplete and inaccurate information as it rammed through the financial rescue of Bank Century.

''Bank Indonesia's announcement that Bank Century was in trouble and needed a bail-out was not supported by accurate and updated data,'' BPK's chairman, Hadi Purnomo, said.

''As a result, they disbursed up to 6.7 trillion rupiah [$720 million], far higher than the 632 billion rupiah [$70 million] previously estimated [needed] to save Bank Century.''

The bank was too small to be a systemic risk to the Indonesian financial system and almost half of the money was disbursed illegally, the BPK found. More than 80 per cent of the funds went to replenish bankers, shareholders and other related parties who had lost money due to ''illegal practices and violations of regulations''.

The public version of the report from the agency did not reveal who benefited from the disbursements.

Among the beneficiaries of the bail-out were Indonesia's elite, including the treasurer of Dr Yudhoyono's re-election campaign and other big donors.

There are widespread calls for a more detailed inquiry into the affair and Dr Yudhoyono indicated on Sunday night he was prepared to support one after months of resisting.

In an address to the nation scheduled for late last night, Dr Yudhoyono was expected to call for police and prosecutors to drop the pursuit of two senior members of the country's independent Corruption Eradication Commission, or KPK.

Strong evidence has emerged through wiretaps that the pursuit of the two KPK deputies was a high-level conspiracy by law enforcement leaders angered at a KPK probe into their rampant bribe-taking, including in the Bank Century case.

Dr Yudhoyono will then demand ''corrective measures'' to weed out corrupt members of the police, the Attorney-General's department, and the KPK.

Susno Duadji, the chief of police detectives implicated in the wiretaps, will be removed but the chief of police will stay.

Source:The Sydney Morning Herald

Century Bank Funds Go To 50 Non-prioritized Customers

ANTARA News, November 29, 2009AXT66RWCQZKU.

The Center of Financial Transactions Analysis and Reports (PPATK) has stated that former Bank Century funds have also gone to 50 customers who are not prioritized to receive them. "There are 50 customers involved in 124 transactions which according to regulations are not prioritized to receive them," PPATK chief Yunus Husein said in a dialogue at a television station broadcast live here on Saturday.

He said the tracing on the 50 customers was done upon the request of the State Audit Board (BPK) conducting investigative auditing recently.

"That is why we have done it. Perhaps BPK thought there were problems with regard to the 50 customers in connection with the 124 transactions," he said.

Yunus said it was not impossible that those who had conducted disbursements or enjoyed the funds were those having connections with the bank.

The connections can be managerial, family, financial and others. Based on regulations they are not under priority to receive bank disbursements.

"Bank Indonesia has also admitted that they are connected with the bank and so they are not prioritized to get the funds," he said.

Yunus said no funds from Bank Century had flown directly to political parties however he said that PPATK would not stop tracing."I can work maximaly if there were initial information from those concerned," he said.

Soource: ANTARA News

JK Asked to Reveal The Truth in Century Case

KOMPAS.com-english, 28 November 2009.

Senior Golkar Party politician Zainal Bintang has asked former Vice President Jusuf Kalla to speak up about the Bank Century scandal. "Former Vice President Jusuf Kalla knows a lot about the Bank Century case and therefore we call on him to speak up," the Golkar senior politician said here on Friday. He said Jusuf Kalla should show his great spirit as a "father of the nation" and explain the Bank Century scandal which had caused the state to lose trillions of rupiah. Kalla should throw light on many unclear things in the Bank Century case to avoid frictions and chaos in the government, Zainal said.

"When Jusuf Kalla was vice president, he once said the Bank Century case fraught with criminal acts," Zainal said.
He added the scandal that had inflicted a loss of Rp6.7 trillion on the state should be explained by Jusuf Kalla because the case came up when he was vice president in President Susilo Bambang Yudhoyono’s first administration.

"It means Jusuf Kalla should also speak up about the case to give inputs to the House of Representatives (DPR) inquiry team, because based on my observations in the field, many parties expected Kalla to reveal it," Zainal Bintang said. Therefore, he expressed hope that the former vice president would be ready to explain everything about the Bank Century scandal to the House of Representatives.

Source: KOMPAS.com-english