Into the lions’ den: Finance Minister Sri Mulyani Indrawati smiles as she receives flowers from supporters before testifying before a legislative inquiry committee on the Bank Century bailout at the House of Representatives in Jakarta on Wednesday. JP/Wendra Ajistyatama
Lawmakers met their match Wednesday when Finance Minister Sri Mulyani Indrawati presented unyielding advocacy of her case against allegations of legal violations in the Bank Century bailout.
“All of Indonesia” benefitted from the controversial bailout, Mul-yani argued. “With the correct decision ... the economy did not contract due to the global crisis.”
Unlike previous witnesses, Mul-yani was never once deterred by the barrage of questions and accusations that went on for more than 10 hours, often delivered in adversarial style or strident tones.
She answered questions with detailed explanations and unwavering arguments, defending the Century bailout, which, in her words, helped the country avoid a bigger economic crisis than that during the 1997-98 Asian crisis.
Prosperous Justice Party (PKS) legislator Fachry Hamzah praised Mulyani’s appearance before the inquiry, as the, “best source testifying before the inquiry team so far.”
“Unlike previous sources that have appeared here, you [Mulyani] have never answered our questions with ‘I forget’, ‘I don’t know’, or ‘Let me check it first’,” Fachry said.
Mulyani said firmly that the decision to bail out Bank Century on Nov. 21, 2008, was based on ‘unsatisfactory’ data from Bank Indonesia (BI) on the exact state of ailing Century.
She said the data later proved to be insufficient to measure the exact cost to resuscitate the bank from collapse. The capital injection to keep Century afloat ended up by July 24, 2009, with a total cost of Rp 6.76 trillion (US$716 million), more than 10 times the initial estimate.
Nevertheless, she said, data presented by BI and internal data from the finance ministry was enough for the decision makers to conclude that liquidating the bank instead of saving it from collapse would pose a systemic threat to the whole banking and financial system.
“The KSSK [Financial System Stability Committee] would stick to the decision to declare Century a failed bank posing a systemic threat, even if BI presented more accurate data,” she said, referring to the committee responsible to evaluate the systemic risk presented.
The minister also said she had no regrets at all about saving the bank, now rebranded as Bank Mutiara.
“As you can see, the country’s economy remained in pretty sound condition during and after the crisis … And emerged as one of the best economies in the world amidst the global crisis,” Mulyani said.
Acknowledging lawmakers’ skepticism on the systemic threat posed by the collapse of Century, Mulyani urged them to look back to the consensus of the House of Representatives in the fourth quarter of 2008.
She said during a hearing with House’s Commission XI overseeing financial affairs on Dec. 3, 2008, legislators had recommended “the bailout be followed up with more efforts to prevent the global economic crisis affecting Indonesia.”
Mulyani was less convincing on the legality of the Coordinating Committee (KK), a body whose membership included the finance minister and BI governor, responsible for ordering the bailout based on recommendations from the KSSK.
PKS lawmaker Andy Rachmat raised the issue of the report of the Supreme Audit Agency (BPK) concluding there was no sound legal basis for the role of the KK.
“The KK was formed almost instantly, like a housewives gathering … Wasn’t the KK meeting assembled just like that early on the morning of Nov. 21, probably on the advice of your legal council?” asked Andi, to which the minister nodded.
She argued that the KK had been established since 2004 and that the BPK referred to the wrong legal article in support of its conclusion.
The House inquiry hearing into Century on Wednesday ended at 10.30 p.m. and will continue today at 10 a.m. presenting former vice president Jusuf Kalla. (bbs)