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Analysis: KPK investigation into Bank Indonesia a blow to reputation
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Bank Indonesia (BI) Governor Perry Warjiyo talks during a livestreamed press briefing after the monthly Board of Governors meeting in June. (Courtesy of Bank Indonesia (BI)/-)
T
he Corruption Eradication Commission (KPK) raided Bank Indonesia’s (BI) office on Monday over allegations of misappropriation of Corporate Social Responsibility (CSR) funds. The investigation included a search of the office of BI Governor Perry Warjiyo, marking a significant blow to the central bank's long-standing reputation for integrity and professionalism, which had largely remained untarnished during Perry’s tenure.
The potential loss of BI’s credibility comes at a precarious time, as the Rupiah faces increasing depreciation pressures in the foreign exchange market. Confidence in the central bank is crucial during periods of currency volatility. Any erosion of BI’s reputation could hinder its ability to stabilize the Rupiah and maintain investor trust, exacerbating economic uncertainty.
The operation follows suspicions raised in September, when the KPK first reported potential misuse of BI’s CSR funds. According to a KPK representative, the funds were allegedly used to finance fictitious projects by recipient foundations. The KPK also revealed that two suspects in the case—members of the House of Representatives (DPR) Commission XI for the 2019–2024 period, identified by the initials S and HG—have been named.
Sources from Tempo suggest that nearly all Commission XI members could be implicated in the misappropriation case. Reports indicate that expert staff from the commission were instructed to attend a special meeting with BI structural officials at a hotel to discuss CSR fund allocation mechanisms. It is also speculated that members of the Supreme Audit Agency (BPK) might be entangled in the case, potentially explaining the significant unaccounted-for funds.
Governor Perry Warjiyo has denied allegations of mismanagement in the distribution of CSR funds, emphasizing that BI adheres to governance principles and regulations. He noted that recipient foundations are required to be legally recognized and have concrete work programs.
Meanwhile, concerns about political dynamics under President Prabowo Subianto’s administration add further complexity to the situation. Observers have noted a trend of overhauling leadership positions across ministries in the Red and White Cabinet, as well as in large state-owned enterprises (SOEs), to favor President Prabowo’s allies. Notably, representatives from political opponents, including the Indonesian Democratic Party of Struggle (PDI-P) and the NasDem Party, are absent from the bloated 48-member cabinet.
Despite these shifts, BI’s board of governors remains composed entirely of appointees from former President Joko "Jokowi" Widodo. Governor Perry Warjiyo, a Jokowi nominee, began his second term in May 2023, just before Jokowi’s presidency ended. Many speculate that this move was intended to extend Jokowi’s influence over BI during Prabowo’s administration. These speculations were further reinforced when Senior Deputy Governor Destry Damayanti, another Jokowi nominee, was reappointed to her second term in May 2024, after the February presidential election.
