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I did the right thing: Sri Mulyani
Sri Mulyani Indrawati: (JP/Jerry Adiguna)Former finance minister Sri Mulyani Indrawati told the Jakarta Corruption Court on Friday that even in hindsight, the bailout of Bank Century, now renamed Bank Mutiara, was the right decision to make
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Sri Mulyani Indrawati: (JP/Jerry Adiguna) (JP/Jerry Adiguna)
Sri Mulyani Indrawati: (JP/Jerry Adiguna)
Former finance minister Sri Mulyani Indrawati told the Jakarta Corruption Court on Friday that even in hindsight, the bailout of Bank Century, now renamed Bank Mutiara, was the right decision to make.
Sri Mulyani, now World Bank managing director, testified about her role in the bailout decision, which Corruption Eradication Commission (KPK) investigators have said was rife with irregularities and caused massive state losses.
She stressed that the bailout decision was made to prevent a snowball effect from the global financial crisis of 2008 having an impact on the Indonesian economy.
As chairman of the then Financial System Stability Committee (KSSK), it was her duty to prevent the outbreak of a financial crisis, she said. 'As chairperson of the KSSK, I was tasked with safeguarding the Rp 5,000 trillion [US$433.83 billion] Indonesian economy,' she testified.
The KSSK was a joint forum of the Finance Ministry, Bank Indonesia (BI) and other related agencies to work on measures to prevent a financial crisis.
After taking into consideration the recommendations from BI officials, Sri Mulyani announced on Nov. 21, 2008, that Bank Century was a failed bank that would have a systemic impact on the economy.
She claimed that she reported the bailout decision to President Susilo Bambang Yudhoyono and then-vice president Jusuf Kalla.
'The threat of a crisis was still very much felt, and the public's trust had waned,' she said, adding that she made the decision out of fear of a repetition of the 1998 monetary crisis that had ravaged the banking sector.
When KPK prosecutors asked her how she could justify her decision as beneficial to the country, she countered with the fact that the country did not suffer chaos in the 2008 turmoil. 'Did our economy experience a deficit? No, our economic growth was stable at 4 percent, one of the highest in the world [at that time].'
During a KSSK meeting on Nov. 20, 2008, then Deposit Insurance Corporation (LPS) chief commissioner Rudjito along with the chairman of the Capital Market Supervisory Agency (Bapepam), Fuad Rahmany, then Fiscal Policy Agency chief Anggito Abimanyu and Bank Mandiri president director Agus Martowardojo tried to convince the meeting attendees that a bailout was unnecessary as the bank did not in any way pose a systemic threat.
'Everyone expressed their opinions, but there were no exact measures to ascertain whether the bank could be regarded as a systemic threat or not,' Sri Mulyani said, adding that she did not want to risk triggering mass panic by closing down a bank.
She admitted that the decision was made in a rush as she was only given four-and-a-half hours to decide the bank's fate. 'The decision needed to be taken before trading began on Friday [Nov. 21, 2008].'
Sri Mulyani also expressed her disappointment over the quality of data presented by BI, then led by Vice President Boediono, before making the bailout decision.
'At the time, I felt very disappointed about the quality of data that was presented by Bank Indonesia. But I knew that in my capacity as finance minister, the fate of the entire Indonesian financial system was at stake. So, I urged Bank Indonesia to take responsibility for the numbers they provided,' she said.
She said that the problems plaguing Bank Century were not her responsibility, but those of BI. She said she was unaware that Bank Century had accounting irregularities that caused the bailout fund to balloon tenfold over the course of a weekend.
According to Sri Mulyani, the LPS reported that the bailout had topped Rp 6.1 trillion, far exceeding its initial estimate of Rp 632 billion.
She also questioned BI's professional judgment and supervisory capacity as Century's capital adequacy ratio (CAR) had plunged to -35.9 percent, and more funding was needed.
The Supreme Audit Agency (BPK) announced late last year that the state had lost more than Rp 7 trillion in the bailout, Rp 6.7 trillion of which was in the form of the direct bailout, while an additional Rp 689 billion was in the form of BI short-term assistance (FPJP).
In an indictment document that The Jakarta Post obtained, the Century bailout fraud was allegedly committed 'collectively' by Budi Mulya, Boediono, then BI senior deputy governor Miranda Goeltom and then BI deputy governors Siti C. Fadjrijah, Budi Rochadi, Muliaman Hadad, Hartadi Sarwono and Ardhayadi Mitroatmodjo. (tjs)
