KPK FINALLY SUMMONS VP, FINANCE MINISTER ON CENTURY BAILOUT By Fardah

Jakarta, April 27, 2010 (ANTARA) - The Corruption Eradication Commission (KPK) has finally done what many people following developments in the Bank Century case had been waiting for : summoning Vice President Boediono and Finance Minister Sri Mulyani.

Boediono, former Bank Indonesia (BI) Governor, and Sri Mulyani, former chairperson of the defunct Financial System Stability Committee (KSSK), are considered key figures in the government`s decision to bail out the failed bank.

"We sent the summonses to (former BI governor and now Vice President) Boediono, and Finance Minister Sri Mulyani on Monday (April 26)," KPK spokesman Johan Budi said.

He did not mention the specific time and place for Boediono`s and Sri Mulyani`s clarification, but Boediono and Sri Mulyani would be questioned either at the KPK office or their respective offices, probably later this week.

Yopie Hidayat, the vice president`s spokesman, confirmed on Tuesday that the summons arrived on Monday afternoon (April 26).

Boediono would not be investigated, but be asked to clarify his role in the Bank Century case as the then governor of the country`s central bank, Hidayat said.

"We cannot confirm the date and venue for Boediono to give the clarifications to the KPK. For sure, Vice President Boediono very much supports the KPK`s steps in fighting corruption, and fully supports efforts to deal with the Bank Century case legally and immediately," he said.

Bank Century collapsed after its assets worth Rp11.6 trillion were transferred and stashed overseas by its major shareholder Robert Tantular, through his security company Antaboga Delta Sekuritas.

On November 21, 2008, the Financial System Stability Committee (KSSK), chaired by Finance Minister Sri Mulyani, declared Bank Century a failed bank.

Ailing Bank Century was later safeguarded by the government through the Deposit Insurance Agency (LPS) with a bailout fund amounting to Rp6.7 trillion. The bailout sparked public criticism and questions as it was disbursed without approval of the House of Representatives (DPR).

The government has injected fresh funds totaling Rp6.7 trillion, or far in excess of the Rp1.3 trillion the government had previously mentioned to the DPR. The initial bailout discussed with the DPR amounted to only Rp360 billion to Rp1.3 trillion.

"The figure we discussed in our latest hearing was Rp1.3 trillion. How could the Rp1.3 trillion all of sudden swell into Rp6.7 trillion. What we are questioning is its legal basis," Commission XI Chairman Ahmad Hafiz Zawasi said in August 2009.

Indications of criminal offenses in the Bank Century case were revealed during a closed-door meeting of the House of Representatives (DPR)`s Commission XI for financial affairs at the end of September 2009. After studying the results of a progress report by the State Audit Board (BPK), the House found that various alleged banking crimes had taken place in the bank.

The interim audit report also indicated that alleged abuse of authority or error of judgment by Bank Indonesia (BI/the central bank) and the Financial Sector Stability Committee (KSSK) had also occurred that had caused a considerable amount of financial loss to the state.

The funds were disbursed under Government Regulation in lieu of Law No. 4 / 2008 on Financial System Safety Net (JPSK) which basically was never approved by the House.

Dradjad H Wibowo of Commission XI of the House of Representatives said in August 2009 that LPS might suffer a loss of Rp5 trillion when Century Bank divested its shares later on.

He questioned the big amount of bailout funds injected into the bank. "We should examine whether there is a close relation between Century Bank officials and decision makers in the government," Wibowo said.

Robert Tantular was jailed for four years in connection with the Bank Century case. In January 2010, Central Jakarta District Court increased the sentence of Robert Tantular from four to five years plus a fine of Rp50 billion.

In December 2009, Former Bank Indonesia (BI) governor Burhanuddin Abdullah said he did not believe that if Bank Century had collapsed it would have had a systemic effect.

BI during his chairmanship had focused on supervising 15 major banks dominating 85 percent of Indonesia`s banking industry shares, but Bank Century was not one of them.

"The three banks which had merged into Bank Century were very small. Even the owners were not known, and the merger was intended to help get majority share owners who could be recognized as the owners. Our spirit was to heal the banking sector," he said.

On December 1, 2009, the House of Representatives (DPR) at a plenary session approved a legislators` motion to use their right of inquiry on the ailing bank`s bailout with Rp6.7 trillion.

On March 3, 2010, having conducted an investigation for about two months, the House Inquiry Committee presented its final views over the bailout.

Of the nine factions of the House in the committee, seven mentioned that violations had been committed with regard to the issuance of the Short-Term Funding Facility (FPJP) and Temporary Capital Participation (PMS) amounting to Rp6.7 trillion for Bank Century.

Only two factions held the opinion that the extension of the FPJP and PMS did not violate any regulation because it was done in accordance with the required procedures. The two factions are the factions of the ruling Democratic Party (PD) and the Nation`s Awaking Party (PKB). PKB is one of the parties in PD`s ruling coalition partners.

Finance Minister Sri Mulyani as former chief of KSSK, the institution responsible for issuing the bailout policy, and then Bank Indonesia governor Boediono, are believed to have been responsible for issuing the bailout policy.

Their responsibility has especially been affirmed by the House of Representatives` Inquiry Committee on Bank Century Case in their recommendations.

The House Speaker said that follow-up actions on the House recommendations would depend on the law enforcing agencies, mainly the KPK, the National Police and whether or not they would take a follow up action.

In the Bank Century case, the KPK has questioned dozens of people, including Bank Indonesia officials among others Budi Mulya, Muliaman D Hadad, and Budi Rochadi, Budi Armanto, Heru Kristiana, Halim Alamsyah, Pahla Santosa, and Ahmad Fuad, and LPS officials Noor Cahyo, L. Tobing, and Ahmad Fuad Rahmany.

Last April 22, the KPK investigation team questioned former Bank Century president director Hermanus Hasan Muslim. The bank`s former president director was specially questioned about the flow of bailout funds amounting to Rp6.7 trillion the bank had received from the Deposit Insurance Institute (LPS).

A thorough and comprehensive settlement of the Bank Century bailout case seems like a long and winding road. But, Yopie Hidayat, Boediono`s spokesman, has ensured that the vice president is eager to see the Bank Century case settled in the good interest of all parties.

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