Boediono: No special treatment for Bank Century

Vice President Boediono denies Bank Century had been given special treatment in his term as the Bank Indonesia (BI) governor during a House of Representatives inquiry committee hearing into a controversial bailout on Tuesday.

Boediono was answering Anas Urbaningrum from President Susilo Bambang Yudhoyono's Democratic Party, a member of the committee.

Anas asked Boediono about the latter's clarification on the statement issued in an audit report from the Supreme Audit Agency (BPK) on the Bank Century bailout scandal, which is said to have cost the country Rp 6.76 trillion (US$709 million).

"The BPK report said that Bank Indonesia might have fabricated some of its own regulations, so that Bank Century was made eligible to receive the short-term liquidity fund (FPJP). Was this treatment given only to Bank Century?" Anas asked Boediono.

The issuing of the FPJP was cited as one of the initial regulatory violations by BI during the bailout decision-making process in a critical report by the Supreme Audit Agency (BPK).

The BPK’s audit says the justification for the Rp 689 billion FPJP was based on a possible fabrication by BI, which changed its own regulations concerning the minimum capital adequacy ratio (CAR), which banks must fulfill to be eligible for the FPJP, to 2.35 percent from 8 percent on Nov. 14 last year.

Boediono responded by saying that during his term the country was facing a possible economic crisis due to the global downturn, so that the regulation on the FPJP had to be made flexible.

"In that kind of situation, if a bank had been left to fail, no matter how small, then it could have caused a chain reaction in the banking system. So, Bank Indonesia had to be flexible with its regulation on the FPJP," he said.

"And the regulation changes do not only apply to Bank Century, but to all banks in the country," he added.