Indonesia: Bank bailout sparks political crisis

The Bank Century bail out in Indonesia has become a national scandal which divided public opinion and the House of Representatives.

The case involved two Indonesian economic reformers namely Minister of Finance Sri Mulyani Indrawati and the Vice President Boediono.

In 2008 the Committee for Financial System Stability (KSSK) led by Sri Mulyani at that time took over Bank Century because of its negative financial status. Later on, the state-owned Deposit Insurance Agency (LPS) claimed 90 percent of Bank Century's share and injected 6.7 trillion rupiah or almost US$700 million in total by February 2009.

Bank Century under PT Century Bank management was a small bank, but without the bailout, according to VP Boediono, the bank's collapse could jeapordize the country’s banking system. During that time, the financial crisis was spreading around the world.

The special committee to investigate the Bank Century bailout (Pansus Century) is composed of people's representatives from 8 political parties. Their job is to probe those who were involved in approving the controversial bail out program.

Blogger Patung wrote about the case:

The scandal that has become known as “Centurygate” revolves around not only the massive drain on state funds involved, but questions of whether some depositors (such as tycoon Boedi Sampoerna) had preferential treatment or access to their funds after the bailout money had been injected, and whether some of the money was diverted and embezzled.

Last Wednesday 325 Pansus Century members cast their votes at the House of Representatives to decide whether or not the bail out was necessary. Only 212 members of Congress belonging to three political parties, including the president's Democratic Party, voted in favor of the bailout. While the rest voted against and encouraged both VP and Minister of Finance to resign in order to be investigated.

On Thursday, the President finally broke his silence. During his speech, he backed both VP and the Finance Minister saying that he regrets that the committee's long inquiry overlooked the precarious situation at the time when a quick decision-making is required to weather the global economic crisis.

Twitterers sighed in relief following the much awaited speech, though some commented that the President's speech was much delayed.

@tyasnotys: whtever u said,gw ttp ngrasa pidato SBY td tepat.he actually knows how to speak properly in this condition #pidatosby

I think the speech is proper.

@treespotter: Presiden SBY yg menunggu sekian lama utk menjelaskan kebijakannya – karena terpaksa merespon DPR – cuma buat rakyat bingung. #PidatoSBY

President Yudhoyono waited so long to define his policy, forced to respond to the House of Representatives – in the end confusing the people.

@treespotter: This would be a good speech by President SBY,if delivered 3 months ago. Meh. #PidatoSBY

Unspun ponders if the speech was really timely:

If SBY has any leadership qualities at all he would know that commanding the loyalty and trust of the most capable lieutenants like Sri Mulyani and Boediono is crucial to his Cabinet’s performance and how history would judge him.

With people like Sri Mulyani and Boediono if you believe them then you need not micromanage, just run interference for them to do their jobs and, when they get into trouble, you run interference to get them out of the mess.

SBY did nothing like that. Whe the Bank Century case began to mushroom he hid behind the excuse of non-interference and let them blow in the wind. It is only when the Pansus votes have been counted and SBY himself was personally out of danger that he finally comes out to provide some statement of support for the duo.

For people like SBY his undoing will be the gradual abandonment of good people from his ship. Unspun’s sure that the only motivations keeping Sri Mulyani, Boediono and other smart ministers still in the cabinet is the prospect of being able to do something positive for the Nation; as opposed to working for a shmuck for a boss.

Krisnov who blogged at Politikana stressed that the recommendation of the special committee should be honored and that the culprits should apologize and step down.

SBY melupakan fakta, bahwa kebijakan bailout bank Century menimbulkan korban yaitu para nasabah yang kehilangan haknya. SBY juga melupakan fakta bahwa uang 6,7 T itu adalah kekayaan Negara.

Kesalahan memang bukan kejahatan. Tetapi seorang pejabat negara selain dituntut untuk tidak melakukan kejahatan, tetapi juga dituntut untuk tidak melakukan kesalahan.

Jika SBY, Boediono, dan Sri Mulyani masih punya rasa malu dan harga diri, semestinya malu juga ketika kebijakan yang dikeluarkannya terbukti tidak dapat diimplementasikan dengan benar dan malah disalahgunakan oleh orang lain untuk merugikan orang banyak. Memohon maaf dan mengundurkan diri adalah jalan seorang yang terhormat dan mulia.

President Yudhoyono has forgotten the fact that Bank Century's bailout has victimized some, in which the bank customers who lost their rights. The president has also forgotten the fact that the IDR 6.7T belonged to the state.

(It's true that) Mistake isn't a crime. But a state official is required not only to follow the laws and not to commit any crime but also to be correct and not to commit any mistake.

If the President, Boediono and Sri Mulyani still have some shame and dignity, the should feel ashamed when the policy they created can't be applied correctly and ended up being misused by someone and ended up causing some damage. Apologize and resign are the respectable and noble ways.

Indonesians are divided over the ‘Centurygate’ issue. Anti government protests were launched in the country, some of which turned violent like the action in South Sulawesi capital of Makassar.