Former vice president Jusuf Kalla said he was led to believe that the controversial 2008 bailout of Bank Century was a necessary action

I Believed Century Mustn’t Fail: Kalla

By Rizky Amelia on 6:58 am November 22, 2013.
Former vice president Jusuf Kalla on Thursday said he was led to believe that the controversial 2008 bailout of Bank Century was a necessary action. Kalla said while he was serving as vice president he received a report saying that Bank Century was a failed bank and its collapse would trigger a domino effect that could cripple Indonesia’s economy. “It’s a failed bank because it was robbed, I received a report that the bank was troubled because of the stealing,” he said after being questioned by the Corruption Eradication Commission (KPK) on Thursday as a witness.Kalla said based on the report he issued an instruction to arrest those responsible.

However Kalla denied knowing anything about the controversial Rp 6.7 trillion ($577 million) bailout.

To date the KPK has charged just two people, former Bank Indonesia deputy governor Budi Mulya and fellow former deputy governor Siti Chalimah Fadjrijah, in connection with alleged abuse of power for their roles in approving the bailout.

The case revolves around whether Century should have been issued with a short-term loan facility (FPJP).

Budi’s lawyer, Luhut Pangaribuan, said that BI was entitled to extend the FPJP to Century if there was no alternative.

Budi and other central bank officials, including Vice president Boediono, who was the governor at the time of the bailout, have repeatedly said that allowing Century to collapse would have led to a run on the banks.

Budi, who was the deputy in charge of monetary and foreign exchange management, said Century was declared to be a bank with a “systemic impact” and was given a loan before it was bailed out.

However, he declined to explain what went wrong during the process and whether BI was pressured to issue the FPJP.

Budi only answered that the FPJP was issued in accordance with regulations.

Critics of the bailout have pointed to the now-defunct Financial System Stability Committee (KSSK), chaired by the then-finance minister, Sri Mulyani Indrawati, as being responsible for determining that Century’s collapse would undermine Indonesia’s banking sector.

The political fallout from the case saw Sri Mulyani leave her post to take up a seat as a managing director of the World Bank in Washington, D.C.

Raden Pardede, the former KSSK secretary, said on Wednesday that the committee could not be held responsible for issuing the FPJP.

KPK chairman Abraham Samad said the antigraft body would continue to develop the case and pursue other parties that were involved.

Previously the KPK has questioned Finance Minister Agus Martowardjojo, former BI governor Darmin Nasution, and Muliaman Hadad, the chairman of the Financial Service Authority (OJK)’s board of commissioners.

Interest in the case has been revived with recent claims by Robert Tantular — the bank’s former co-owner, who has just finished serving a four-year jail sentence for violations committed prior to Century going bust — that there were political motivations for allowing the bank to fail, and that nearly a third of the bailout money never reached it.

Robert’s lawyer, Andi Simangunsong, said on Monday following his client’s questioning by the KPK that Rp 2 trillion of the fund was never injected into the failing bank, but kept at the central bank instead.