This so-called saga could become a major setback for the SBY government if the President is not willing to be firm in preventing the case from being used against him.
The crash-programs of the first one hundred days, announced with a lot of fanfare, have not been implemented due to the attacks on the Corruption Eradication Commission (KPK) by the National Police and the Attorney General’s Office, and the Bank Century case. Instead of quick and resolute action by the President, the KPK case was stopped by public opinion, led by the media and civil society.
Now the Bank Century case has become a game for the parliament, based on its right to investigate, known as the inquiry right. Speculations on the case are ample, from the involvement of people close to SBY having deposits of election donations in the bank, to Boediono’s mistakes as then governor of the central bank with possible impeachment, and efforts from some political parties to get rid of the Finance Minister Sri Mulyani Indrawati, because she did not want to give special treatment to some party leaders.
The parliament, with a very low public opinion, is divided about the objective of the “inquiry”. The only good thing expected to come out are the facts of the case so that further legal steps can be taken.
But the media and relevant NGOs should be aware of possible abuses or efforts to divert attention from the main issues.
So far, the case involving the former top Bank Indonesia officials has made the image of the central bank look very negative. Previously, the bank was a very credible and respected institution. Corruption has seemingly occurred since the Bank Century merger in 2003, as there was no effective control of the bank. While it is impossible to expect that Boediono could have been involved in the corruption, as the governor he had to be responsible until the end.
The case at Bank Indonesia has to be unearthed completely so that Bank Indonesia’s credibility can be upheld — this is long overdue.
The most critical issue for Boediono and Sri Mulyani has been their assertion that their decision was based on the possibility of a systemic meltdown of the banking and financial system if Bank Century was not saved. And if their argument is correct, then their political decision saved Indonesia’s financial and banking sector from another melt-down. And we should thank them instead of persecuting them.
This point, however, should be verified by credible experts in banking and financial institutions. After interviewing several experienced and credible, national (private and state) and international bankers; experts from other financial institutions (international insurance, macroeconomic and finance) and business leaders (Indonesian and foreign), it became clear to me that all of them thought the Bank Century debacle, if let loose, would surely have had a systemic impact on the whole financial and banking system of Indonesia, which could have been even worse than the earlier crisis (1997/1998), because money from the US, the EU and Japan might not have been available this time
as those countries were in crisis themselves.
The experts argued that in a pa-nicked situation like September-December 2008 (when Lehman Brothers collapsed) and in a crisis situation — especially in East Asia where the 1997/1998 financial crisis was still a nightmare and suffering a deep hangover — the whole world was affected.
For Indonesia, which had only given limited guarantee to bank depositors (up to Rp 2 billion each) while all other East Asian economies had given blanket guarantees to all deposits in all banks, a rush to pull back their money was almost a certainty. Since everybody was in a frenzy psychologically during that panicky period, the collapse of even a small bank like Bank Century surely would have resulted in a systemic collapse of the banking system in Indonesia.
Most of those interviewed were also of the opinion that Sri Mulyani plays a critical role in SBY’s economic team, because she is strong-willed, tough and cannot be moved by political expediency alone. Her track record clearly demonstrates that she formulates policies that are based on her technical expertise and intellectual honesty. For that she has been willing to stick her neck out to defend the policies she believes in. In a government with a weak leadership she is playing a critical role. And if she is not in the Cabinet, there will be concerns about consistency and continuity because the economic team will face more difficulties to consistently stick to policies.
Without consistency, Indonesia’s economic development is never going to take off to reach the 7-8 percent growth of GDP that Indonesia needs in order to become another economic power among the emerging markets like the BRIC countries, and more importantly to overcome poverty and employment challenges in the future.
Vice President Boediono is a person with high integrity, and nobody believes that he received something from Bank Century. Although he has to be responsible, common sense should dictate that a way out should be found for him, which is definitely not impeachment because that would be messy and very divisive politically and will take a long time to be solved.
We should go after the corrupt individuals, including in the central bank, but we also have to make it possible that the country, people and government will move on and not get bogged down in this Bank Century case.
The writer is deputy chair, Board of Trustees, CSIS Foundation.
