Dion Bisara & Muhamad Al Azhari

Activists from the group Monitoring Corruption protesting in front of the Finance Ministry in Jakarta on Tuesday. They demanded a full investigation of the controversial Bank Century bailout.  (Photo: Safir Makki, JG)

Sri Mulyani, Boediono To Face Indonesia's Audit Agency Over Bank Century

The Supreme Audit Agency is expected to summon Finance Minister Sri Mulyani Indrawati and Vice President-elect Boediono soon to question them about the controversial bailout of PT Bank Century, the agency’s chief said on Tuesday.

Anwar Nasution, the head of the agency, also known as the BPK, said Sri Mulyani would be summoned in her capacity as head of the Financial Sector Stability Committee (KSSK) and Boediono as then-Bank Indonesia governor at the time of the bank’s bailout.

“We will summon all related parties . . . the sooner the better,” Anwar said, speaking on the sidelines of a hearing at the House of Representatives on Tuesday.

Nasution also revealed that the audit would not judge the legality of the bailout by the central bank and the Finance Ministry, but would examine how the decision was made. Nor would the audit seek to determine whether some depositors were granted preferential treatment or access to their funds after the bailout, saying the deposits were protected by confidentiality laws.

Meanwhile, the Corruption Eradication Commission (KPK) is investigating whether Boedi Sampoerna, the scion of the powerful Sampoerna family, illegally withdrew $18 million of the $200 million he had deposited at the bank. The Indonesian Financial Transactions and Analysis Center (PPATK) is expected to participate in this investigation.

However, evidence gathered by both agencies can later be used in corruption investigations by law enforcement bodies such as the KPK or the National Police.

Anwar said the BPK planned to finalize its interim investigation by Sept. 30, and present its report to the House on Oct. 19.

Firdaus Djaelani, the executive director of the State Deposit Insurance Corporation (LPS), which injected fund into Century, and other top KSSK officials would also be summoned for questioning. So far only Raden Pardede, the secretary of KSSK, has been summoned by the BPK.

During its investigation, Anwar said the BPK would also examine the merger creating Century in 2004, and how the lender later acquired licenses to operate as a foreign-exchange bank. It would also create a detailed timeline of the government’s efforts to police Century since it first came under intensive supervision by the central bank in 2005, until its collapse last November.

The BPK would also examine a series of short-term liquidity injections by the central bank from October through November, before Century collapsed; the reasons for the government’s decision to label Century a systemic threat to the banking system; and how the Rp 6.7 trillion ($676.7 million) in rescue funds injected by the LPS was spent.

However, Anwar said the audit agency did not have the authority to access information concerning some of Century’s biggest depositors — who are suspected of using their influence to withdraw money illegally — because of banking confidentiality laws.

“For this, we will be helped by the PPATK,” he said.

Anwar said the BPK had received a letter on July 5 from the KPK requesting an investigation of the controversial bailout.

However, he said the central bank’s reluctance to cooperate delayed the start of the probe, and it was not until the House publicly called for an investigation in late August that the probe gained momentum.

Anwar said BI initially resisted BPK’s request to audit its actions regarding Century because the BPK was only allowed by law to audit Bank Indonesia’s financial reports. The agency cannot legally audit other business and foreign-exchange transactions unless there is evidence of corruption.

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