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

Century team to summon Boediono and Sri Mulyani

The Bank Century inquiry committee is questioning Vice President Boediono and Finance Minister Sri Mulyani on their decision to issue Rp 6.76 trillion (US$716 million) in bailouts.

The decision to summon Mulyani and Boediono was made during the first plenary meeting of the House of Representatives committee in Jakarta on Monday.

Mulyani and Boediono decided to salvage the bank during a meeting in November last year. During that time, Boediono was the Bank Indonesia governor.

Mulyani and Boediono said their motives were nothing more than to save the nation by preventing a possible systemic collapse of the country’s banking system by saving Bank Century during the global
financial crisis.

Economists and legislators at the House’s finance commission, however, have doubted their reasoning, citing that Bank Century was a small and insignificant bank. Legislators also questioned the bailout, because its amount was much higher than the amount agreed by the House, which ranged between Rp 600 billion and Rp 1 trillion.

An audit report from the Supreme Audit Agency (BPK), recently submitted to the House, also said there might have been a number of procedural violations conducted during the bailout process.

Along with Mulyani and Boediono, the 30-member inquiry committee will also summon a number of people deemed to know more information about the bailout.

One of the committee deputy chairmen, the Indonesian Democratic Party of Struggle’s (PDI-P) Gayus Lumbuun, said former National Police detective chief Comr. Gen. Susno Duadji, would also be summoned. Susno was heard in a wiretapped conversation by the Corruption Eradication Commission (KPK) to have allegedly asked for a Rp 10 billion bribe during the debacle.

Gayus also said that former vice president Jusuf Kalla would be summoned, because he was the acting president when the bailout was issued. During that time President Susilo Bambang Yudhoyono was abroad.

Despite determining the people and institutions that needed summoning, the committee has yet to determine the fixed schedule of the summoning.

“Our summons will be directed by the development of the investigation,” committee chairman Idrus Marham from the Golkar Party said.

The committee has currently only established a fixed meeting schedule with the BPK and the Financial Transaction Report and Analysis Center (PPATK).

“We are going to meet with the BPK on Wednesday, and PPATK on Thursday,” Idrus said.

The committee plans to discuss the people that need summoning and budgeting Tuesday.

During the hearing, there was also a debate on whether the committee’s future hearings should be made open to the public.

Yudhoyono’s Democratic Party, which has the most members in the committee, insisted that the meeting should be closed door.

However, other parties insisted the meetings be open to the public and the media. The committee agreed that all hearings and inquiries be made open, unless there were requests from certain witnesses. “But the final say will be made by committee members,” committee deputy chairman, Mahfudz Siddiq from the Prosperous Justice Party (PKS), said.

http://www.thejakartapost.com/news/2009/12/15/century-team-summon-boediono-and-sri-mulyani.html

Committee blighted by parties' political interests: Observers

Major political parties are intensifying closed-door lobbying among themselves and with high-ranking officials in the leadup to the Bank Century inquiry committee during the House of Representatives' recess period.

The committee, chaired by Golkar secretary-general Idrus Marham, will go on a week-long break, and will be back to work on Dec. 14.

Legislators have said that those lobbying, which include the government's coalition bloc and mem-bers of opposition groups, are concerned with the inquiry's exit strategy, including who should be saved and victimized, as well as what the politicians could gain from the government if they followed the design.

A committee member claimed that the parties involved in the lobbying are aiming to predetermine the results of the inquiry so that by the time it begins its first meeting everything would have been settled.

Ahmad Muzani from the Great Indonesia Movement Party (Gerindra) said that as the major parties had pre-decided the committee chairman even before the formal election was conducted demonstrated backroom deals would determine the results of the inquiry rather than the official meeting.

"If we reflect on the chairman selection process, it is clear that we cannot do anything to go against the government and its large coalition bloc. From the beginning, it's a political compromise, and it will last until the end."

The Democratic Party has expressed its minimum target of getting the President and Vice President Boediono off the hook, with no comment on Finance Minister Sri Mulyani's culpability or lack thereof.

Rescue missions to save Mulyani are reportedly underway, with a group of businesspeople, a political party and supporters on Facebook intensifying efforts to defend the reform-minded minister.

Sources have said that a tycoon was approaching the House's major factions to save Mulyani while in the online world, the rescue mission began with the establishment of a Facebook group named "We Believe in the Integrity of Sri Mulyani".

As of the time of writing, the group had gathered 10,060 members.

On Saturday, the United Development Party (PPP) invited Mulyani to explain the bailout, with the party chairman and Religious Affairs Minister Suryadharma Ali stating his party needed more firsthand information about the case.

The Golkar Party aimed at more seats for either the Cabinet or state enterprises, party officials have said.

Party chairman Aburizal Bakrie, who reportedly plans to run for president in 2014, said he would not seek to impeach Yudhoyono and Boediono.

Yudhoyono's other coalition members, which include the Prosperous Justice Party (PKS), the National Mandate Party (PAN) and the National Awakening Party (PKB), also looked to strengthen their position against the government through the inquiry move, observers have said.

Burhanuddin Muhtadi from the Indonesian Survey Institute (LSI) said that all political parties, pro-government or opposition, knew about each other's dirty laundry.

As a number of high-ranking PDI-P figures are tangled in graft cases. Burhanuddin said such a condition would eventually cause PDI-P legislators at the committee to succumb to their party's political bargaining interests.

The PDI-P's Gayus Lumbuun, however, said that his party would work seriously, even if it were waylaid by its members' legal problems.