A former owner of Bank Century, Robert Tantular, has suggested the bank was allowed to collapse so that the government could initiate a bailout.
“We suspect there were ‘invisible hands’ that intentionally caused the bank’s collapse and made Bank Century unable to meet its daily obligations.
‘‘Such a possibility is related to the events that led to the government’s intervention in the mid-sized bank,” said Robert’s attorney Andi F. Simangunsong at the Corruption Eradication Commission (KPK) office in Jakarta on Friday.
Andi said the Rp 6.7 trillion ($600 million) bailout is suspicious because Rp 2.2 trillion of the amount was immediately placed at the central bank in the form of a Bank Indonesia promissory note (SBI).
“In the banking world there are what you call fictitious accounting reports. We need to ascertain if BI had a report on Bank Century’s Rp 2.2 trillion SBI or whether it was just a fictitious report. We are going to ask KPK to see if they can trace those funds,” said Andi.
Andi said his group would also ask KPK to trace Century’s capital outflows to trace where the funds went.
The attorney said his client told him the bank did not need the Rp 6.7 billion that was eventually pledged.
“My client told me he felt Rp 1 trillion was enough to rescue the bank at the time,” Andi insisted.
Andi went on to explain that the government — in this case, the central bank — hadn’t granted the bank’s request for a Rp 1 trillion bailout on Oct. 29, 2008.
That rejection eventually caused the bank to collapse on Nov. 13, 2008, and the government ended up providing Rp 6.7 trillion in funding.
“So, if you ask if this was a failed bank with a systemic impact, you would have to refer to the assessment made by the Financial System Stability Committee (KSSK),” said Andi.
The bailout of the mid-sized lender, during the height of the global financial crisis, generated immense controversy in Indonesia.
Critics have alleged a litany of irregularities in the decision, which some lawmakers say was taken to save politically connected depositors — including people with close links to President Susilo Bambang Yudhoyono, the Democratic Party’s chief patron.
The House adopted a resolution in 2010 declaring the bailout fundamentally flawed, which compelled the KPK, the Attorney General’s Office and the police to begin parallel probes into the bailout and the subsequent flow of money.
The KPK has stepped up its investigation recently, raiding the central bank in July and seizing documents pertaining to the bailout.
The House says one of the key documents in the case is a power of attorney letter issued in November 2008, in which Boediono, the central bank governor at the time and now the nation’s vice president, instructed three senior central bank officials to approve an initial short-term loan facility (FPJP) of Rp 600 billion for Century.
The power of attorney was issued just days after Zainal Abidin, Bank Indonesia’s director of supervision, sent a letter to Boediono on Oct. 30, 2008, informing him Century was not eligible to receive the loan facility because its capital adequacy ratio was below the minimum 8 percent.