What's wrong with Bank Century?

On November 2008 the Indonesian government took over Bank Century, a private bank jointly owned by Indonesian and Pakistani shareholders, which has suffered a loss of Rp. 7.3 Trillion.

According to Finance Minister Sri Mulyani, the decision was made because at that time the national economy was not stable and the bank was too big to fail that its collapse would have great impact on Indonesia's entire banking system.

Due to this condition, the People's Representative Council (DPR) permitted the government to inject Rp 1.3 Trillion to the bank.
However, by the end of the first half of 2009, the government-run Deposit Insurance Agency (LPS) had injected into the bank a total of Rp 6.76 trillion ($669 million) to shore up liquidity and pay off liabilities, therefore almost 4 times than the amount agreed by the DPR.
As a result, in the first half of 2009 Bank Century was able to have a net profit of Rp 140 billion during the period.

The DPR was very surprised with the very large increase in the amount of money injected to the bank, so its members requested the State Audit Agency (BPK) to conduct special audit on the bank.

This case is extremely interesting because the flow of taxpayer's money was done not long before the Parliamentary election (April) and Presidential election (July), but the news about it was widely exposed afterwards.
Further, the state authority that supervise banking, Bank Indonesia, at that time was headed by Boediono, the running mate of Presidential candidate i.e. incumbent President Susilo Bambang Yudoyono.
Furthermore, the foreign major shareholders are not available for questioning because they have runaway.

Due to which facts, many people have requested the government to give transparent explanation, some even suspected political motives behind the flow of money, especially after Vice President Jusuf Kalla described the flow of money would implicate many important people in this country. And the Commission for Eradication of Corruption(KPK) has been urged to investigate the case.

For details on the above, please click here, here, here, here, here and here.

It is very sad that the non transparent flow of large amount of tax payers' money could take place at a time when Indonesia's economic and financial conditions are not good. I hope that the case would be revealed to the public as soon as possible and anyone involved should be responsible.

Photo: Courtesy of Detik.