Whole bailout process was ‘illegal,’ says audit agency

The investigators into the Bank Century’s bailout may be hitting a wider target as the Supreme Audit Agency (BPK), whose recent report is the basis for the probe, underlined Monday the bailout process might not have a legal basis.

On Monday, the BPK hosted a meeting with representatives from three law enforcement institutions, the Corruption Eradication Commission (KPK), the National Police, and the Attorney General’s Office, as well as the Financial Transaction Report and Analysis Center (PPATK), to discuss its findings that might lead to criminal charges arising from the case.

A member of the BPK who was also the head of the BPK’s investigation team on the Bank Century case, Hasan Bisri, reiterated the agency’s findings, as stated in the audit report, that the whole bailout process resulting in Century being handed over to the Deposit Insurance Corporation (LPS) might be illegal due to the absence of a clear legal basis.

A body called the Coordination Committee (KK) officially handed over the Bank Century to the LPS, but the BPK audit said the KK had never been legally formed.

According to Article 21 of the 2004 Law on LPS, a troubled bank considered to constitute a systemic threat to the banking system should be handed over by the KK to the LPS. However, the detail of the law said that the KK could only be established after the enactment of the proposed law on the financial sector safety net, which has never been established and endorsed.

“In this case, we found that the KK’s legal basis was absent and therefore the LPS management of Bank Century has not been legally covered,” Hasan said.

The KK was crucial because the bailout disbursement could not be done if the committee did not hand over the bank to the LPS.

When asked whether the absence of a legal basis for the KK would mean the whole Rp 6.76 trillion (US$710 million) of bailout was illegal, Hasan said, “I think so.”

LPS executive director Firdaus Djaelani recently said the debate over the KK’s legal basis was due to differences in legal interpretation.

“In my opinion, the KK was legal. It was not a real institution, though. It was like a group of officials.”
KPK acting chairman, Tumpak Hatorangan Panggabean, said the antigraft body would only investigate violations committed by authorities and leading to state losses.

“If you ask whether the KPK has found graft indications? I answer, yes. We have kicked off preliminary investigations but have yet to be able to publicize the case.

“We will soon summon witnesses, search offices, seize evidence, in order to find facts before we can name any suspect,” Tumpak said.

National Police Chief Detective Comr. Gen. Ito Sumardi, meanwhile, said that detectives would soon question Ito’s predecessor Comr. Gen. Susno Duadji over the Century scandal.

Susno previously said that he had information about the recipients of the bailout funds.

Another BPK member, Taufiequrahman Ruki, said the investigative audit of the bailout had found nine violations that could potentially be categorized as crimes.

“The possible crimes don’t only include corruption, but also banking crimes and money laundering, as well as general crimes,” Ruki, a former KPK chief, said.

Information on the nine findings will be distributed to three law enforcement institutions. The violations were allegedly committed by officials from Bank Indonesia, the Financial System Stability Committee (KSSK), the LPS and Bank Century itself.

http://www.thejakartapost.com/news/2009/12/15/whole-bailout-process-was-%E2%80%98illegal%E2%80%99-says-audit-agency.html