Febriamy Hutapea – The Corruption Eradication Commission on Monday contradicted earlier statements by several government officials over the source of the Rp 6.7 trillion ($710 million) used to bail out PT Bank Century, by declaring the money state funds.

"According to the Anti-Corruption Law, the bailout money is considered state funds," Tumpak Hatorangan Panggabean, interim chairman of the commission also known as the KPK, said on the sidelines of a meeting with the House of Representatives.

Tumpak said that even though the funds did not originate from the state treasury, the rescue package disbursed by the Deposit Insurance Agency (LPS) consisted of government money.

Other officials have said the rescue funds were not state money because they came from premium payments by private banks. If the funds were property of the state, they would have been under increased government oversight, while private funds would have been more loosely controlled, possibly opening the door to malfeasance.

Tumpak argued that the LPS was established with initial capital from the government, and that the LPS had to coordinate with the government through the House if it was short of funds.

His statement echoed former Vice President Jusuf Kalla's testimony this month before the House special committee probing the rescue. Kalla told lawmakers that the LPS funds used to salvage Bank Century belonged to the state.

"The LPS answers to the president and undergoes an audit by the BPK and its start-up fund was taken from the state budget, which means [LPS funds] amount to state assets," Kalla said.

Finance Minister Sri Mulyani Indrawati had told the committee the money could not be classified as state money because it had been collected from other banks.

"Other laws might stipulate different things, but the antigraft law says that state money comes from the state treasury" and from sources outside the treasury, Tumpak said.

Lawmakers have agreed with the Supreme Audit Agency's (BPK) report which categorized the LPS funds used to bail out Century as state money.

Also on Monday, two legal experts gave differing opinions when testifying before the committee.

Banking expert Erman Rajagukguk said the money disbursed by the LPS was not state money because it was separate from the treasury. Even though the funds were audited by Supreme Audit Agency (BPK), Erman said, one could not automatically assume the money belonged to the state.

A former Constitutional Court justice, Ahmad Syarifuddin Natabaya, said the LPS fund was state money according to the law. "It's why BPK has the authority to audit it," he said.

Tumpak declined to say whether the bailout had caused the state to suffer losses. "That's still under investigation."

During the hearing with House Commission III overseeing law and security, the KPK said it had intensified its investigation into Bank Century by summoning several state officials.

KPK Deputy Commissioner Chandra M Hamzah said the KPK had summoned 14 Bank Indonesia officials, seven LPS officials, 13 Bank Century executives and two officials from the Finance Ministry. "We have received additional documents from the related institutions," he said.

Chandra denied accusations that the KPK had softened its stance in probing the bailout. "We want to collect strong evidence during the investigation process to avoid character assassinations of the people we have summoned," he said.