SP/Novianti Setuningsih – Antigraft investigators have confirmed that the controversial Rp 6.7 trillion ($663 million) bailout of Bank Century in 2008 hinged on a decision to bend banking regulations, in a development that could potentially see Vice President Boediono be charged in the case.
Abraham Samad, the chairman of the Corruption Eradication Commission (KPK), said over the weekend that his office had determined that a key Bank Indonesia regulation was changed to allow Century to get a short-term loan facility (FPJP) despite not being eligible for it.
Abraham said that such a change would have required the approval of the entire board of governors of the central bank, headed at the time by Boediono. "Everyone on the board of governors would have been responsible for that decision," he said.
"If later on we find sufficient and accurate evidence pointing to the involvement of other people, even the central bank governor at the time, we won't have any qualms about naming them suspects."
The KPK has already charged two former deputy governors, Budi Mulya and Siti Chalimah Fadjriah, for allegedly abusing their authority by approving the FPJP.
Abraham said the KPK's investigation would not stop at the central bank, but would also look into the role of officials on the Financial System Stability Committee (KSSK), which was chaired by the country's finance minister at the time, Sri Mulyani Indrawati.
Sri Mulyani quit the government in May 2010 to become a managing director at the World Bank in Washington, amid recriminations by legislators over her role in the Century bailout. She was visited earlier this year by KPK officials as part of the ongoing investigation into alleged corruption in the events surrounding the decision to grant the bailout.
Abraham said the latest finding, about the change in the BI regulation, emerged from the questioning of Sri Mulyani.
The bailout of Century, a mid-sized lender, during the height of the global financial crisis generated immense controversy in Indonesia, with critics alleging a litany of irregularities in the decision that some say was taken to save politically connected depositors.
The House of Representatives adopted a resolution in 2010 declaring that the bailout was fundamentally flawed, which compelled the KPK, the Attorney General's Office and the police to launch parallel probes into the bailout and the subsequent flow of money.
The KPK has stepped up its investigation recently, raiding the central bank earlier this month and seizing documents pertaining to the bailout.
The House says one of the key documents in the case is a power of attorney letter issued in November 2008 in which Boediono instructed three senior BI officials to approve an initial FPJP of Rp 600 billion for the ailing Century.
The power of attorney was issued after Zainal Abidin, BI's director of supervision, sent a letter to Boediono on Oct. 30, 2008, informing him that Century was not eligible to receive the loan facility because its capital adequacy ratio was below the minimum 8 percent.
The KPK has promised to bring the first of the Century suspects to court before the end of the year, saying it was in the process of building up a prosecution against Budi.
It says it is still waiting for a medical evaluation on Siti, who is reportedly partly incapacitated as a result of a stroke. To date, only the former owners of Century have been convicted, but for unrelated banking violations committed before the bank was bailed out.