SBY: We Saved Indonesia’s Economy
President Susilo Bambang Yudhoyono on Thursday night defended Vice President Boediono and Finance Minister Sri Mulyani Indrawati, saying they were not guilty of illegally bailing out Bank Century in 2008 as lawmakers have accused, and were instead saviors of the nation.
“Regarding the policy to save not only Bank Century but also the national banking system and even the national economic system from the global crisis, without any hesitation, I affirm that the policy to save Bank Century was accountable,” Yudhoyono said in a speech broadcast live across the nation from the State Palace in Central Jakarta.
He said that if anyone else had been in their position, they would have done the same thing.
The president said that although he respected the results of the two-month-long inquiry into the Bank Century bailout, the process had “forgotten” the precarious situation at the time and the spotless records of Boediono and Sri Mulyani.
“It is often forgotten that our motherland is lucky because the Financial System Stability Committee [KSSK] had already been established, led by Dr. Sri Mulyani Indrawati and Prof. Dr. Boediono — two children of the nation whose track records have no blemishes in relation to their competence, credibility and personal integrity,” he said.
Yudhoyono said that the decision was taken at the height of the global financial crisis in late 2008 when a quick response had been needed and therefore they should not be subject to criminal charges.
Although he was overseas at the time and had not been asked nor gave a decision, directive or instruction to rescue the bank, the president said, “I can understand why the decision to save it was taken.”
“Not only understand,” he continued, “but also approve the policy of saving Bank Century.”
Yudhoyono also said that at the time of the bailout, the legislative and the executive branches of government were in agreement over the critical nature of the situation and the need for quick decision-making in times of crisis.
“It is the existence of this shared perception between the House of Representatives and the government that is now forgotten,” he said. “Nowadays, it seems like the reasons behind the action on Bank Century have become blurred.”
He pointed out that compared to the economic crisis of 1998, the country had been able to weather the storm at much less cost.
“The cost of the 1998 crisis burdened the state budget by up to Rp 656 trillion [$70.85 billion], a gigantic cost when compared with the temporary capital injection from the Deposit Insurance Agency [LPS] into Bank Century, which was at Rp 6.7 trillion,” he said, adding that while the cost of the 1998 crisis was borne by the state, the Bank Century bailout funds came mostly from bank insurance premiums collected by the LPS.
The president also said that because the House’s conclusion was “political” and could not be used in court, “It needs to be followed up in accordance to the regulations, by upholding the supremacy of law and justice.”
Yudhoyono said the country’s democratic system demanded that not only the rule of law be upheld, but also common sense. “A democracy that is based on law and reason,” he called it.
Earlier in the day, Sri Mulyani had visited the House to deliver the 2008 state budget amendment before a plenary session.
Speaking afterwards, she reiterated that the decision to rescue Bank Century was made to prevent the country from being adversely affected by the global financial crisis and was “based on the authority I had.”
“It’s different from the ‘truth’ that was based on the political decision or because of the power,” she said, adding that she was not worried about the legal process running its course to bring anyone found to have breached the law to justice.
Boediono is scheduled to deliver a speech today.
Ari Dwipayana, a political analyst from Gadjah Mada University in Yogyakarta, said that the president’s national speech could have an influence on the legal process.
“The speech seems to defend those who have been mentioned by the House committee as responsible. The speech could restrict the police or prosecutors investigations,” he said.
Additional reporting from Febriamy Hutapea.