Indonesia parliament recommends probe into bank bail-out - Summary

Jakarta - Indonesia's parliament voted late Wednesday to recommend that law enforcement bodies investigate the 2008 bail-out of a small bank. Lawmakers at the House of Representatives voted 325 against 212 in favor of a conclusion that the 6.7-trillion-rupiah (723-million- dollar) rescue of collapsing Bank Century was unjustified and that the law had been broken in the process.

The Democratic Party of President Susilo Bambang Yudhoyono unsuccessfully tried to persuade rival factions to switch sides at the last minute but the effort was unsuccessful.

"We hope that the dynamics surrounding the Bank Century case will soon be over and we can continue our duties to serve the people," Anas Urbaningrum, a legislator from the Democratic Party, said after the vote.

The former ruling Golkar Party and the Muslim-based Prosperous Justice Party, both represented in the coalition cabinet, and the opposition Indonesian Democratic Party of Struggle, argued that the then-central bank governor Boediono and Finance Minister Sri Mulyani Indrawati were at fault for the bail-out.

Boediono, who is now vice president, and Indrawati are regarded by many in the business community as reformers and among the most capable technocrats in Yudhoyono's coalition government.

Some analysts said they believed Boediono and Indrawati were unlikely to go, but any attempt to criminalize their policies could derail reforms.

Parliamentary factions opposed to the bail-out said that Bank Century would not have posed a systemic threat to the banking sector if it had been allowed to collapse.

They alleged that the central bank failed to conduct proper oversight, allowing corruption and money laundering to occur.

Factions defending the bail-out, led by the Democratic Party, argue that the move prevented a crisis in the banking system that could have been catastrophic for the country's economy, which was badly hit by the 1997-98 Asian financial crisis.

The Supreme Audit Agency last year listed several irregularities linked to the bail-out process, including the failure of the central bank to provide full information.

The cash injection has prompted accusations that some of the money went to the campaign for Yudhoyono's re-election last year, a charge denied by the president.

Source: Earth Times.
Link: http://www.earthtimes.org/articles/show/312332,indonesia-parliament-recommends-probe-into-bank-bail-out--summary.html.