SBY may have approved Bank Century bailout

Leaked and confidential state documents have unveiled that President Susilo Bambang Yudhoyono may have been involved in the controversial bailout of Bank Century.

The set of documents comprise official letters and reports from former finance minister Sri Mulyani Indrawati to the President as early as Nov. 25, 2008, when the Financial System Stability Committee (KSSK), which was authorized to assess the bailout plan, slapped a default status on the bank and considered it a threat to the banking system.

Politicians responsible for initiating the inquiry into the alleged Bank Century bailout scandal claimed the documents were further evidence of flaws in the government’s decision to disburse Rp 6.76 trillion (US$750.36 million) to the ailing bank.

Prosperous Justice Party (PKS) lawmaker M. Misbakhun, claimed that the documents represented strong proof that the President had been involved in the effort to rescue Bank Century, which has now been rebranded as Bank Mutiara.

“In his official speech in March, last year, Yudhoyono gave the impression that he had not been informed about the measures to salvage the bank nor had he been asked for input and suggestions. The President cannot wash his hands like that,” Misbakhun said.

One of the documents Misbakhun was referring to was an official transcript of a KSSK meeting on Nov. 13, 2008. Sri Mulyani had joined the meeting from Washington via teleconference.

At the meeting, attended by all KSSK members including then Bank Indonesia (BI) governor Boediono (now Vice President), Sri Mulyani said that she had met with the President in the US and informed him of the problems surrounding Bank Century, according to the transcript.

“In his speech, Yudhoyono also said that he had not made any direction or instruction that had lead to the bailout, but these documents reveal that Sri Mulyani decided to salvage the ailing bank with Yudhoyono’s approval,” Golkar lawmaker Bambang Soesatyo added.

Three letters were signed by Sri Mulyani and copies were obtained by The Jakarta Post.

The speech to which Misbakhun and Bambang refer was Yudhoyono’s official response to the House of Representatives’ conclusion of the inquiry into the bailout in March last year.

In December 2009, Misbakhun, Bambang and seven other legislators managed to mobilize political support to investigate the bailout, which established an inquiry.

Misbakhun, who has been released from prison after serving one year on document forgery charges, a case he claimed was orchestrated by those opposing his moves to uncover the bailout scandal, denied that he was seeking ways to take revenge on those in power.

“As one of the initiators of the inquiry, I have a responsibility to uncover those who were responsible for this unlawful bailout,” he said.

Last week, Sri Mulyani met with President Yudhoyono at the State Palace in her capacity as a World Bank managing director.

However, observers suggested that the two might have also have conspired over the bailout case, given that certain politicians were seemingly attempting to re-expose it.

In a speech aired live on television, Yudhoyono slammed the suggestion by saying that those making such statements were “out of their minds”.

“I have asked the Corruption Eradication Commission (KPK), the police and prosecutors to work on this case,” Yudhoyono said.

Also on Tuesday, the KPK grilled former BI senior deputy governor Miranda S. Goeltom in relation to the bailout investigation.

The commission has previously questioned suspended BI deputy governor Budi Mulya in the same case.

The KPK began its investigation not long after the House finished its inquiry in March last year, but no suspect has been named until today.

In May, the former owners of Bank Century, Indian national Hesyam Al Waraq and UK national Rafat Ali Rifzi, filed an international arbitration lawsuit against the Indonesian government with the Washington-based International Center for the Settlement of Investment Disputes.