Letter to the editor: Clarification from Anwar Nasution

I was disturbed by the news story, “Close ties to BI ‘helped’ Bank Century break rules” (The Jakarta Post, page 2, Dec. 26, 2009), which said among others things: “In testimony to the House bailout inquiry committee, Anwar claimed he had only met Robert once…”

Reporting the news, Ika Krismantari misquoted my statement before the House of Representatives’ Bank Century Inquiry Committee on Dec. 21, 2009. For clarification, below are the main points I dealt with at the House inquiry committee meeting:

I met only once with Rafat Ali Rivzi, a controlling shareholder of Chinkara Capital requesting the acquisition of Bank Pikko, CIC and Danpac. Rivzi was accompanied by executives of the three banks at a meeting I presided over at Bank Indonesia (BI) on April 16, 2004.

The meeting inquired about the fulfillment of requirements determined by the BI Board of Governors’ meeting (RDG) on Nov. 27, 2001 so as to enable Chinkara’s acquisition.

The requirements were: a CAR minimum of 8 percent, bank management improvement, and no more violations of banking prudential rules.

I have never met with or known the other two controlling shareholders of Bank Century, both Robert Tantular and Alwarraq Hesham Tallat.

The meeting I headed on April 16, 2004 reaffirmed the three acquisition requirements already determined by the RDG on Nov. 27, 2001.

Unlike previous RDG sessions, the one on April 16, 2004 fixed a more definite schedule for the settlement of problem securities (SSB) so as not to be open-ended.

I emphasized Chinkara should promptly settle the SSB issued by Dresner Bank, which was in arrears and had no rating, thus failing to serve as the capital payment of Bank CIC and Pikko. Unless this was fulfilled, the acquisition would be cancelled and Pikko and CIC dissolved.

I instructed BI’s directorate of bank supervision 1 to monitor the implementation of Chinkara’s commitment as indicated on April 16, 2004, in the following ways: Chinkara should open an escrow account at a leading bank in Indonesia as cash collateral; it should convey a power of attorney for cash collateral disbursement to bank custodians; in the case of Chinkara’s failure in its commitment, the cash collateral would be disbursed to increase the capital of CIC and Pikko.

My term of office at BI expired on July 25, 2004. From April to July 2004, Chinkara deposited US$30 million in the escrow account out of the $32 million worth of problem SSB.

After leaving BI, I no longer monitored the progress of the RDG decision on April 16, 2004 and the fulfillment of the RDG requirements on Nov. 27, 2001 when BI issued a merger license to Bank Pikko, CIC and Danpac on Dec. 6, 2004. I have no idea either why BI’s supervision over Bank Century was very weak in its early age, during December 2004-November 2008. It is also illogical to me why such a small bank could have a systemic impact requiring a bailout with such a huge public fund.


Prof. Dr. Anwar Nasution
Jakarta