Big shots blamed for costly bailout

Suspicion has arisen among lawmakers and activists that high-profile and politically wired depositors may have influenced the decision to salvage the small-time Bank Century.

The swelling bailout of Rp 6.76 trillion (US$676 million) — almost triple the originally calculated Rp 2.27 trillion — may have been used to patch the bank's financial gap caused by fleeing big depositors after the bank received an injection from the government-sanctioned Deposit Insurance Agency (LPS) on Nov. 23.

Big depositors feared losing their entire funds if the bank collapsed as the government only guarantees deposits below Rp 2 billion per account.

It is due to the possible rush by big depositors that the LPS had to unexpectedly inject more funds to stabilize the bank, Achmad Hafiz Zawawi, the chairman of the House of Representatives' Commission XI for financial affairs said Monday.

“We have received reports of early indications that big depositors influenced Bank Indonesia [BI] to force the government to salvage the bank because they risked losing money,” he said.

“That's why we have requested the Supreme Audit Agency [BPK] to clarify this issue. We are hoping the LPS fund was not used to pay these kind of depositors.”

Circulating information from the House reveals the families of Sampoerna and Arifin Panigoro, and several state companies — PT Jamsostek, PT Timah, and PTPN —  are among the big depositors.

According to BI's director for banking supervision, Budi Armanto, around Rp 5.7 trillion of the Rp 9.63 trillion in deposited funds flew out of the bank between November and December last year.  

The LPS first injected Rp 2.77 trillion of cash into the bank on Nov. 23 to help improve the bank's capital adequacy ratio (CAR) to 10 percent from a negative 35.92 percent.

While the bank seemed stable, more withdrawals from large account owners forced the LPS to inject another Rp 2.20 trillion on

Dec. 5. The agency injected another Rp 1.15 trillion on Feb. 3 and Rp 630 billion on July 21.

Budi, however, refused to elaborate on whether the later injection was needed to fill the gap caused by the excessive withdrawal of funds.

Lin Che Wei, the advisor to the Sampoerna family, refused to comment on the issue.

Arifin Panigoro could not be reached for comment. His  secretary said the issue was a matter of banking secrecy and could not comment further.

Indonesian Corruption Watch in its press briefing Tuesday believed the withdrawal of huge funds from big depositors after the injection ignited suspicions that the bank's rescue was mostly aimed at saving the big shots rather than preventing a systemic economic threat as lauded by BI.

Lawmaker Dradjat Wibowo from Commission XI believed that BI played a bigger role in pressing the government to rescue Bank Century, and it was the main engineer behind all LPS policies in channelling the bailout.

Indeed, LPS managing director Firdaus Djaelani said the agency was only tasked to pass BI policies.
BI spokeswoman Dyah Makhijani denied the allegation of lobbying from big depositors, saying there were too many rumors circulating.

Elsewhere, Finance Minister Sri Mulyani Indrawati accused BI of poor disclosure over fraud allegation that existed in Bank Century.

“BI did not report any fraud. If BI already knew about it, it should have requested the arrest [of Century's management],” Mulyani said on Tuesday.