JP/IrmaJP/Irma – Nothing is more alluring for politicians and opportunists right now than jumping on the bandwagon to condemn the costly Bank Century bailout. The target is clear: President Susilo Bambang Yudhoyono, vice president-elect Boediono and Finance Minister Sri Mulyani Indrawati. The Jakarta Post's Rendi A. Witular, Aditya Suharmoko, Andi Haswidi and Andra Wisnu dig deeper into the issue.
A Cabinet member told The Jakarta Post recently that the messy Bank Century bailout, which was uncovered during a hearing between the Finance Ministry and lawmakers in late July, should be traced back to Nov. 13, 2008.
That was the day when Finance Minister Sri Mulyani discussed with President Yudhoyono the trouble faced by Century on the sidelines of a G20 meeting in Washington DC, United States.
While little is known about the meeting, the Cabinet member believes it was possible a political deal had already been struck to salvage Bank Century.
"What matters is not whether the meeting (between the finance minister and Vice President Jusuf Kalla on the bailout) occurred on Nov. 22 or Nov. 25, as it was on Nov. 13 that everything started," the minister said.
It is possible that Yudhoyono gave Mulyani a mandate to bypass vice president Jusuf Kalla, who was acting president in Yudhoyono's absence, in helping out the bank, he said.
After a meeting with lawmakers on Thursday, Mulyani has refused to comment on the issue.
Outgoing vice president Jusuf Kalla, who still wielded significant political power at the time, has complained the bailout was initiated without his permission.
He said he would not have approved the bailout because the bank was in trouble not by the country's economic state but because of fraud committed by its shareholders.
It was not until Aug. 27 that questions were raised over the importance of keeping the small Bank Century, which was worth just Rp 6.9 trillion (US$690 million) in October, afloat, despite the fact that public knowledge of irregularities in the bank had existed since late 2004.
In a Nov. 21 meeting, the Financial Sector Stability Committee granted a lifeline to Century, leading the Deposit Insurance Agency (LPS) to inject Rp 2.77 trillion into the ailing bank on Nov. 23.
The Committee consists of officials from the Finance Ministry, the central bank and the LPS, and is chaired by the Finance Minister.
Their justification given for salvaging Century was that if it failed it would lead to a domino effect on the entire banking sector.
Lawmakers are suspicious that the bailout was granted not out of a desire to protect the economy from the effects of global financial crisis, but as part of a scheme to rescue the finances of high-profile and politically wired depositors.
Several businessmen close to Yudhoyono are believed to have had deposits in Bank Century.
According to a Golkar legislator and Kompas, Hartarti Murdaya was among the depositors; while Indo Pos daily reported that her husband Murdaya Poo was another one.
Hartarti was the financier of Yudhoyono's 2004 and 2009 election campaigns. She also gave Yudhoyono an office when he resigned from President Megawati's Cabinet in 2003.
Murdaya, a lawmaker, however strongly denies that he and his wife are among the Century depositors. "It's a total lie. My wife and I don't have any link whatsoever with the bank," he said when interviewed at the House of Representatives on Thursday.
Boedi Sampoerna is also believed to have had significant investments in Bank Century.
Lawmaker Dradjat Wibowo says the political motivation for the Century bailout is so significant that it needs to be investigated by the Supreme Audit Agency (BPK) and the Corruption Eradication Commission (KPK).
The KPK first suspected irregularities in the Century bailout late last year, but will only proceed with an investigation should a BPK audit produce strong evidence of corruption.
Deputy KPK chairman Haryono has said that the KPK has to date not determined any specific irregularities with the Deposit Insurance Agency's (LPS) bailout.
"If the BPK's audit shows any existing rules have been breached in the bailout, we will definitely conduct further investigations," Haryono said.
Yudhoyono has thus far refused to directly comment on the issue.State Secretary Hatta Radjasa told reporters Wednesday that while the President was well-informed on the issue, he had requested the finance minister and Bank Indonesia take charge of responding to it.
"The President has asked the Finance Minister and BI to provide explanations, because such issues are not the domain of the President. It is the Financial Sector Stability Committee and BI that control and supervise the banking sector."
Aside from targeting Yudhoyono, politicians and the President's inner circle are believed to be taking advantage of the debacle to keep Minister Mulyani from getting a position on the incoming Cabinet set to assume office in October.
A source close to the Minister said many parties dislike her tough anticorruption policies at the tax office and the customs office.
"With the minister (Sri Mulyani) gone, recalcitrant businessmen may again collude with tax officials to evade taxes and with customs officials to smuggle goods in," said the source.
The decision to bailout the bank was purely economic, and Mulyani was actually helping former BI chief Boediono take responsibility for cleaning up the mess BI created by not properly regulating Bank Century, he said.
Mulyani said earlier the request for salvaging Bank Century was originally made by BI. While BI had not fully informed Mulyani of the potential that the bank was riddled with fraud, she agreed to take the risk because of the high-degree of economic uncertainty at that time, when the global financial crisis was erupting.
She said she was not aware that Robert Tantular, the owner of the bank who looted the bank's deposits, had enjoyed close ties with the BI's top brass since the 1990s.
The questions of political favouritism and corruption ensure the debacle over the Century bailout will continue until the BPK completes its audit, expected at the end of the year.
"The case is not only rife with debates over the economy and the banking sector, but also questions of political revenge and a power struggle. It's hard to know where will this issue lead to, and what will happen next," said banking analyst Ichsanuddin Noorsy.