BANKS CHECKING PAYMENT SYSTEMS TO PREVENT THEFT

by Andi Abdussalam

Jakarta, March 21 (Antara) - Indonesian banks, particularly large state-owned lenders Bank BNI and Bank Mandiri, are checking their payment systems, following incidents of siphoning off of customers' funds at state-owned Bank Rakyat's (BRI's) Automatic Teller Machines (ATMs).          Jakarta Regional Police investigators have revealed a network responsible for an ATM skimming scam, involving Romanians, Hungarians, and an Indonesian, hacking into 64 banks, including foreign banks.          "Foreign banks have also become the target," Adjunct Commissioner Rovan Richard Mahenu of the General Criminal Investigation Directorate of the Jakarta Police stated in Jakarta on Friday (March 16).          The recent case is the theft of state-owned BRI customers' data by the syndicate, where the suspects withdrew money from ATMs in some regions.          In order to avoid further incidents, banks are checking their payment devices. Bank Mandiri, for example, claimed to be checking its ATMs. Bank Mandiri Corporate Secretary Rohan Hafas remarked that his bank has to assure the security of its payment system.

NEW BI GOVERNOR GETS POSITIVE RESPONSE

by Andi Abdussalam

Jakarta, March 28 (Antara) - Economic observers and bankers have given positive response to the election of current Finance Minister Agus Martowardojo as new governor of Bank Indonesia (BI/the central bank).          He is considered to be the ideal figure to lead the central bank and his election is expected to provide positive impact on BI performance and create stimulus to national economy.         "Agus Martowardojo so far has a positive track record in the banking and financial industries. So, he is an ideal figure to lead BI," Rully Nova, financial market analyst of Bank Himpunan Saudara, said.          As a finance minister, Agus with good vision and mission similar to outgoing BI Governor Darmin Nasution, has good understanding on how to make the fiscal and real sectors run well in Indonesia.          "He is a figure who has the good governance capacity which is needed by BI to produce monetary policies for maintaining domestic economic stability," Rully said.          Finance Minister Agus Martowardojo was elected BI new governor by the House of Representatives (DPR)'s Commission XI on financial affairs on Tuesday.          He will take up his new post in May for the 2013-2018 period to replace outgoing BI Governor Darmin Nasution who will end his term on May 22, 2013.

BANK CREDITS PREDICTED TO GROW 24 PCT IN 2011

By Andi Abdussalam

Jakarta, Dec 17 (ANTARA) -  Indonesia's central bank or Bank Indonesia (BI) has predicted that bank credits --which up to the middle of November this year reached Rp1,664.2 trillion-- will increase by about 24 percent in 2011.          The increase in bank credits next year is expected to help stimulate economic activities, boost the real sector and fuel  economic growth next year.          "With the prediction that economic growth in 2011 will  be the same as this year, credit growth in 2011 has the potential to reach a level between 20 and 24 percent," BI Deputy Governor Muliaman D Hadad said.          With 2010 coming to its conclusion, BI has noted that the banking community's performance in fulfilling its intermediary role - extending credit to business or industry - has continued to improve. In the second week of December, its credits increased by Rp7.06 trillion.          He said that  third-party funds (DPK) were also expected to increase by about 15 to 20 percent next year as  bank credit growth would follow economic growth in 2011 which was expected to be at a range of between 6 and 6.5 percent.          In the second week of December 2010, banks collected DPK funds amounting to Rp19.61 trillion.          Head of BI's Public Relations Bureau Difi A Johansyah said on Tuesday that this year, banks had provided year-on-year (yoy) credits amounting to Rp316.54 trillion or 22.87 percent. They had also collected yoy DPK funds valued at Rp323.38 or 17.26 percent.          Earlier, up to the middle of November, banks in the country provided credits worth Rp234.08 trillion, or an increase by 16.37 percent while in the same period in 2009 credits provided had reached Rp299.32 trillion or 21.93 percent.          In the fifth week of November, banks provided credits worth Rp10.47 trillion and collected third party funds (DPK) amounting to Rp18.47 trillion.          "Based on year-to-date (ytd) records the credit provision in the third week of November increased by 17.44 percent while based on the year-on-year (yoy)  it rose by 22.11 percent," Difi A Johansyah.          The same is true to the third party funds collected by banks. They increased 10.91 percent ytd and 17.35 percent yoy up to the middle of November.          At the end of November, credits' basic interest rate (SBDK) for rupiah dropped significantly by nine basis points (bps) while the average interest rate of one-month deposit increased by one basis point so that the spread of the rupiah interest rate decreased from 5.54 percent to 5.44 percent.          Global uncertainties have led foreign investors at the end of November to take the wait-and-see position triggering outflows of foreign funds again. Foreign funds invested with the rupiah assets decreased by Rp5.11 trillion, namely Rp2.64 trillion in the Bank Indonesia Certificates (SBI), Rp1.22 trillion in the state debentures (SUN) and Rp1.25 trillion in the foreign stake net sales.              The latest developments reduced foreign ownership in the SBI from 30.2 percent to 28.78 percent and in the SUN from 30.46 percent to 30.26 percent. The credit provision of Rp10.47 trillion in the fifth week of November consisted of RP3.93 trillion in rupiah and Rp6.54 in foreign currencies.              In the report week, credits in rupiah increased at almost all bank categories, except at the mixture bank category, which experienced a drop of Rp0.83 trillion. The biggest increase in rupiah credits took place with banks of the private and partnership categories respectively amounting to Rp2.38 trillion and rp1.75 trillion.              In the meantime, the increase in foreign currency credits took place at banks of almost all categories where the highest ones took place with partnership banks worth Rp3.26 trillion and with branches of foreign banks valued at Rp1.97 trillion.              In the foreign currency denomination, banks' foreign currency credits increased US$680 billion in the last week of November.              Third party funds (DPK) increased by Rp18.47 trillion particularly due to the increase in the DPK in the rupiah currency by Rp16.0 trillion while foreign currency DPK only increased by Rp2.47 trillion.              This growth brought the DPK to the amount of Rp214.91 ytd (10.91 percent) and Rp323.06 trillion (17.35 percent) yoy.              BI recorded that up the end of November 2010, the credit growth reached 21.8 percent yoy.  Capital working credits were increasingly accelerated. Ahead, credits would continue to be directed to the productive sectors. With that developments and based on banks' business plan, the overall banks' credits in 2010 are expected to grow by about 22 to 24 percent.          Muliaman D Hadad said that the challenges that would be faced by banks in 2011 included the impact of global economic crisis. In facing this fact, banks should maintain their financial resilience and stability.          The central bank itself also has the task of maintaining financial stability because it is related to its responsibility to maintain monetary stability, BI Deputy Governor Halim Alamsyah said meanwhile.         As regards, the government is planning to establish a Financial Service Authority (OJK) at the end of this year. The OJK would be the sole agency with the power  to supervise all financial institutions in Indonesia.      (T.A014/A/HAJM/16:45/a014) 17-12-2010 16:48:

BANKS' INTERMEDIARY ROLE INCREASING

By Andi Abdussalam

Jakarta, Dec 6 (ANTARA) - The banking community's performance in fulfilling  its intermediary role - extending credit to business or industry - has improved  and the trend is expected to continue next year.          Up to the middle of last month, banks in the country  provided credits worth Rp234.08 trillion, or an increase by 16.37 percent if compared with the same period in 2009 when the figure was Rp299.32 trillion.          This year's credit provision of Rp234.08 trillion brings the total of banks' credit commitment to Rp1,664.2 trillion up to the middle of last November.          In the fifth week of November, banks provided credits worth Rp10.47 trillion and collected third party funds (DPK) amounting to Rp18.47 trillion.          "Based on year-to-date (ytd) records the credit provision in the third week of November increased by 17.44 percent while based on the year-on-year (yoy)  it rose by 22.11 percent," Difi A Johansyah, spokesman of Bank Indonesia (BI/the central bank), said over the weekend.          The same is true to the third party funds collected by banks. They increased 10.91 percent ytd and 17.35 percent yoy.         At the end of November, credits' basic interest rate (SBDK) for rupiah dropped significantly by nine basis points (bps) while the average interest rate of one-month deposit increased by one basis point so that the spread of the rupiah interest rate decreased from 5.54 percent to 5.44 percent.          Global uncertainties have led foreign investors at the end of November to take the wait-and-see position triggering outflows of foreign funds again. Foreign funds invested with the rupiah assets decreased by Rp5.11 trillion, namely Rp2.64 trillion in the Bank Indonesia Certificates (SBI), Rp1.22 trillion in the state debentures (SUN) and Rp1.25 trillion in the foreign stake net sales.          The latest developments reduced foreign ownership in the SBI from 30.2 percent to 28.78 percent and in the SUN from 30.46 percent to 30.26 percent. The credit provision of Rp10.47 trillion in the fifth week of November consisted of RP3.93 trillion in rupiah and Rp6.54 in foreign currencies.          In the report week, credits in rupiah increased at almost all bank categories, except at the mixture bank category, which experienced a drop of Rp0.83 trillion. The biggest increase in rupiah credits took place with banks of the private and partnership categories respectively amounting to Rp2.38 trillion and rp1.75 trillion.          In the meantime, the increase in foreign currency credits took place at banks of almost all categories where the highest ones took place with partnership banks worth Rp3.26 trillion and with branches of foreign banks valued at Rp1.97 trillion.          In the foreign currency denomination, banks' foreign currency credits increased US$680 billion in the last week of November.          Third party funds (DPK) increased by Rp18.47 trillion particularly due to the increase in the DPK in the rupiah currency by Rp16.0 trillion while foreign currency DPK only increased by Rp2.47 trillion.          This growth brought the DPK to the amount of Rp214.91 ytd (10.91 percent) and Rp323.06 trillion (17.35 percent) yoy.          BI recorded that up the end of November 2010, the credit growth reached 21.8 percent yoy.  Capital working credits were increasingly accelerated. Ahead, credits would continue to be directed to the productive sectors. With that developments and based on banks' business plan, the overall banks' credits in 2010 are expected to grow by about 22 to 24 percent.          In the meantime, credit growth next year is expected to reach 24 percent. "With the prediction that the economic growth in 2011 would be the same as the growth this year, the credit growth in 2011 has the potential to reach a level between 20 and 24 percent," BI Deputy Governor Muliaman D Hadad said on Sunday.          He said that the third party funds were also expected to increase by about 15 to 20 percent as the bank credit growth would follow the economic growth in 2011 which was expected to be at a range of between 6 and 65 percent.          Inflation is expected to be at a range of 4 to 6 percent, or similar to the target that has been set. Muliaman said that the challenges that would be faced by banks in 2011 included the impact of global economic crisis. In facing this fact, banks should maintain their financial resilience and stability.          Banks are also challenged to increase their intermediary roles, particularly in providing credits for micro, small and medium scale businesses (UMKM). Credits to UMKM are expected to boost economic growth and increase public access to the banking services.           In the meantime, bank BNI Director for international affairs Adi Setianto said his bank had set itself a target of a 30 percent increase in its credit provision scheme that would be channeled to the consumption sector in 2011.          "Looking at Indonesia's demography where the number of its productive population is high, we have the courage to provide bigger volumes of credits for the consumption sector," he said.          He said that the largest portion of the consumption credit would be provided for the housing sector, particularly for debtors who would own houses for the first time. "We will also set a fund of Rp5 trillion for infrastructure credits," he added.          Adi Setianto said competition in the banking sector was not a matter of how big interest rates they would impose on their credits but on how convenient the services would be felt by their clients when they were involved in a bank transaction. "Competition is more on efficient procedures, not on the interest rates. We cannot compete in the pricing matter because banks set set almost the value," he said.***2*** (T.A014/A/HAJM/12:40/A/O001) 06-12-2010 13:04:

BANKS SHOWING BETTER PERFORMANCE

By Andi Abdussalam

Jakarta, July 6 (ANTARA) - The country's banking system remained stable and performed better in the first half of this year as shown by credit growth, capital adequacy ratio (CAR)  and stable non-performing loan ratio (NPL).          Until the end of June, 2010, banks were able to increase their intermediary role in providing credits which increased by 18.6 percent compared with that in the same period a year earlier.          "The banking industry is showing stable development as reflected by the high CAR and the gross NPL ratio which has remained below five percent," Darmin Nasution, acting governor of Bank Indonesia (BI/ the central bank) on Monday.           He said the banks' intermediary role was also improving as reflected by credit growth which until the end of June 2010 increased 18.6 percent to Rp1,531.5 trillion compared with the previous year's.          Bank Indonesia, he said, would continue monitoring conditions in the banking sector and promoting efficiency to further improve the banks' intermediary role.          According to Perry Warjiyo, director of economic research and monetary policy (DKM) of Bank Indonesia,  bank credits during June 2010 reached a total of Rp1,531.5 trillion which represented an increase of 18.68 percent or Rp241 trillion from the figure in the same month last year.          "For the period of June 9 until July 9, 2010, loans grew by 18.68 percent or an increase of Rp241 trillion to Rp1,531.5 trillion," said.          Perry said the increase in credits occurred because more and more private banks had begun lending following the example of state and regional government banks.          He said loans extended in the period January-June 2010 (year-on-year) had increased by Rp101.3 trillion or grew 7.1 percent compared to the  end of December 2009 when the figure was Rp1,437.930 trillion.          Indonesia's economic growth, he said, had improved since the global economic crisis ended. "During the third quarter of 2009 our economy was driven by consumption, after which it began to switch to exports that caused an increase in imports and investment needs, so that credit grew," he said.          Therefore, Perry said, he was optimistic that by the end of the year credit growth would exceed the maximum target set at 20 percent. "I am sure, credit growth will be more than 20 percent late this year because our economy has become stronger," he said.          With the encouraging growth, Darmin Nasution was earlier reported to have said that the central bank would revise its credit growth target of 17-20 percent  upward to  more than 20 percent this year.          Until the first quarter of 2010 the central bank noted that credits had grown rapidly to reach 17.6 percent. "We will revise it upward because credit grew rapidly to 17 percent or more than in the first quarter of 2010," said Nasution.          On the country's economy, Darmin said the central bank predicted it would grow by up to six percent following the improved developments in the global and domestic economy.          The country's economy tended to grow towards the upper level of the range between 5.5 and 6.0 percent, he said.          "Exports and investments will continue to rise to further strengthen consumption to support higher economic growth in 2010 and 2011," he said predicting that the country's economy would grow between 6.0 and 6.5 percent in 2011.          He said the high surplus recorded in the current account deficit and financial as well as capital transactions was in line with the improving global economy and a hike in the world's commodity prices as well as increasing foreign capital inflows following an improvement in the outlook of the country's credit rating and international perception on the country.          In the face of this favorable condition, BI was urged to continue playing its supervisory role over banks' performance, particularly with regard to the government's plan to hand the austerity to oversee the banking industry to a Financial Service Authority (OJK).          Economists said that BI should continue to be the sole authority to oversee the banking industry as it has already been performing this function quite well. Handing the authority to oversee the banking industry to the OJK the government plans to form by the end of 2010 will only create new problems, they said.          Economist Aviliani and Sigit Pramono expressed the view at a seminar of the Association of Indonesian Economists (ISEI). Aviliani said the authority to supervise banks must not be taken from Bank Indonesia because if it is,  the central bank will have difficulty coordinating and synchronizing the bank industry's data with BI monetary policy.          "So far BI has already had difficulties collecting bank data. So the situation will only worsen if BI's control power is spinned off. This power is very important for BI with regard to bank monitoring and monetary policy making," she said.          She referred as an example to the new policy package issued by BI on June 16 which is based upon statistics of funds in banks.          Sigit Pramono who is general chairman of the National Banking Association (Perbanas) meanwhile said that based on a survey done by Perbanas 95 percent of bankers view that bank supervision by BI in the last five years have gone well despite problems in several banks.          The former president director of state-owned bank BNI said the bankers gave the appreciation because BI had implemented four key principles for bank supervision namely objectivity, transparency, independence and preparedness of human resources and clear authority.          "There is no guarantee that by spinning off  the supervisory power from BI situation would be better," he said. ***2*** (T.A014/A/H-NG/a014)06-07-2010 18:00:5

CENTRAL BANK KEEPS LOW RATE OVER MODERATE INFLATION

By Andi Abdussalam

Jakarta, July 6 (ANTARA) - The central bank, Bank Indonesia (BI), decided on Monday to maintain its low key rate at 6.5 percent after concluding that inflation which some quarters had predicted would be pushed up by the electricity tariff hikes this month was not worrisome.          "The BI Rate is still consistent with the inflation target of five plus or minus one percent for 2010," BI Acting Governor Darmin Nasution said after a board meeting on Monday.          A banker said last month that the government's plan to increase the basic power rate (TDL) by 10 percent and the fuel oil prices would push up the inflation rate, and cause BI's key reference rate to be raised by 0.25 to 0.50 percent.          "The 10-percent increase in the Basic Electricity Tariff (TDL)  for middle and upper class consumers  will lead Bank Indonesia to increase its benchmark rate by about 0.25 percent to 0.50 percent at least by the end of this year," PT OCBC NISP chief commissioner Pramkti Surjaudaja said.          He said an increase in the TDL was indeed unavoidable to improve the performance state-owned power utility firm PLN which was also to repair its worn-out  power transmission line networks. But the increase would also cause an increase in the domestic inflation rate. The increase in the inflation rate was expected to force BI to raise its key rate, he said.          However another banker also predicted last month that the power rate hikes were unlikely to force BI to raise its key rate.  He said the central bank was expected to maintain its key rate at 6.5 percent even though the government was planning to increase basic power rates and fuel oil prices.          According to President Director of Bank CIMB Niaga Arwin Rasyid, the government's plan to increase the TDL rates and fuel oil prices has yet to affect BI's benchmark rate.          He said that it was still too premature to analyze the impact of the power rate increases because it was still in the discourse and was still discussed by the House of Representatives (DPR).          "We could not provide responses yet before the discourse becomes a reality," he said. Moreover, the plan to increase the electricity tariffs and the price of fuel oils had sparked pros and cons, so that its realization would possibly still wait for the correct time.          "We predict that the government would also consider the two factors, even though it is now urgent to increase the electricity rates and fuel oil prices," he said.          BI Deputy Governor S.Budi Rochadi expressed the same view saying that the planned electricity tariff hike effective early July would have little effect on the inflation rate.          "It will have no significant impact on the inflation rate," he said following a function marking the transfer of the post of head of BI's Semarang office last month.          Last month, there was a slight increase in the inflation rate but Darmin Nasution said there was no need to worry about inflation in June which reached 0.97 percent.          He said the inflation was only driven by a price hike in agricultural products which was temporary in nature. "So, June's inflation is not worrisome as it will drop again," he said.          The acting BI governor said that the rate of inflation in June indeed could be considered quite high but he remained optimistic that the yearly rate of inflation would be within the targeted range of five plus or minus one percent.          "For this year it will remain within the targeted range of five plus or minus one percent," he adding that June's inflation was not driven by monetary factors and therefore in the next two or three months it would be corrected downward.          "This is not a monetary phenomenon. It is about supply of onions and chilis. So we need not take special measures. The price of chilis, onions and tomatoes rises each time but it will drop again in two or three months' time. We did not see something needs to be changed," he said.          Darmin Nasution said on Monday that national economic developments had generally shown encouraging progress. "The rate is still conducive for supporting the process of domestic economic recovery in the midst of remaining high crisis risks due to debt problems in a number of European countries," he said.          Darmin said the country's economy continued showing improvement marked by monetary and financial system stability that remained well maintained.          "Global economic improvements have had a positive impact on the performance of external sectors and investment in Indonesia in the second quarter this year so that the recovery cycle of domestic economic was stronger with the economy no longer relying exclusively on consumption," he said.          Bank Indonesia predicted the country's economy could grow around six percent in the second quarter of 2010.          The improvement in the external sector's performance was among others reflected by a surplus in the current balance of payment which is predicted not to reach US$1.75 billon in the second quarter or higher than initially predicted at US1.23 billion.           The surplus in the capital and financial transactions meanwhile is also predicted to be bigger namely reaching US$3.09 billion or higher than initially predicted at US$1.16 billion.           On the impact of the electricity price hike as of July 1, Darmin said it would be seen in the next month but it would not be big.          "It will indeed have an impact and we are predicting its direct impact is only around 0.2 percent while the indirect impact is perhaps just close to two percent," he said.***2*** (T.A014/A/HAJM/13:25/A/O001)06-07-2010 14:07:0

BI KEY RATE AT 6.5 PCT GOOD FOR ECONOMIC RECOVERY

By Andi Abdussalam


Jakarta, Feb 4 (ANTARA) - The Indonesian central bank (Bank Indonesia/BI)'s decision on Thursday to maintain its benchmark at 6.5 percent is seen as a correct step in efforts to strengthen economic recovery and maintain economic stability.

         "The BI decision is already on the right track. It has been decided on a number of basic considerations such as  the movements of inflation and commodity prices which are showing a trend to the normal level," Bambang Prijambodo of the National Development Planning Board (Bappenas) said.

         The central bank on Thursday decided to maintain its key rate (BI-rate) at 6.5 percent after its Board of Governors viewed that the 6.5 percent level was still realistic with the inflation target set at 5 plus - minus 1 percent in 2010.

         BI spokesman Difi A Johansyah said  the 6.5 percent reference rate was conducive to the efforts to strengthen economic recovery process, maintain financial stability and increasing banks' intermediary roles.

         Improvement of domestic economic conditions is taking place as expected and is in line with the ever strengthening global economic recovery.

         "The BI decision is already correct. Thus, its monetary policy needs to be supported so that it would be able to maintain our economic stability," Planning Director of Bappenas Bambang Prijambodo said.

          He said that prudent monetary policy was needed in supporting the development of national economy and in curbing inflationary pressure which had now been showing a trend to the normal level.

         Now, almost all countries are facing a transition period from adopting a moderate monetary policy to the tighter ones, yet they remain prudent.  "Transition would not proceed too fast but in stages within the corridors of the economic conditions of respective countries,"  Prijambodo said.

         Rising inflation is a global phenomenon generated by global economic recovery which in turn also raises global demand and commodity prices.   "In Indonesia, besides by increase in global commodity prices, inflation will also be triggered by the continuous recovery of domestic economy which would perform better than in the previous year,"  he said.

         He said that this would bring an improvement to the domestic demand and moderate exchange rate of the rupiah against the US dollar. The rupiah is expected to be stable at the Rp9,000-9,500 level per US dollar,"  he said.

         This condition will bring the inflation in Indonesia in 2010 to the normal level such as the one before the economic crisis took place. An economic growth of six percent would also be followed by a six percent inflation.

         "Indonesia only has the experience two times when its economic growth was over six percent but its inflation was below six percent, namely in 1971 and 1992," he said.

         He said that Indonesia's economic growth which was likely to reach six percent in 2010 would also certainly be flowed by an increase in inflation.

        "Unlike in 2009 --which is a special case when the inflation rate was only 2.78 percent due to the global economic downturn-- in  2010, the Indonesian inflation will likely return to its normal level," he said.

         That's why, he said, BI was not overacting if it then adopted a cautious policy and assessed how far the inflationary pressure would affect the economic growth as a whole in 2010.

         Therefore, Prijambodo believed that BI would continue to maintain the BI rate at 6.5 percent until the end of the first half of 2010. It would begin to take a tight policy in the second half of the year.

         Ryan Kiryanto, economist of state-owned Bank BNI, said however recently that BI would likely move up its BI rate in the second quarter of 2010. He said that Bank Indonesia's decision to maintain its key rate at 6.5 percent was merely aimed at serving short-term interests.

         "In the short run, the current BI rate is still tenable because of the low inflation rate. But looking ahead, it is very likely it will move up starting in the second quarter," Ryan Kiryanto of state-owned Bank Negara Indonesia (BNI) said.

         Indonesia's inflation rate in January was recorded at 0.84 percent, bringing the year-on-year inflation rate to 3.72 percent, according to the Central Statistics Bureau (BPS).

         The BPS said the 3.72 percent actually showed an increase. "The increase in the inflation rate was mainly fueled by rising food prices," BPS Chief Rusman Heriawan said.

         Kiryanto argued that the inflation would increase in 2010. There would be three reasons for the inflation rate to go up, he noted. The first one would be the impact of a hike in the global oil price which could reach US$100 per barrel.

         Secondly, the better performance of the domestic economy this year was also expected to push up the inflation rate. "This will be in line with the people's increased purchasing power," he said.

         The third factor would be an upward trend in global interest rates as a result of the world's economic recovery, he said.

         "To make assets in rupiah attractive and avoid capital flight, the domestic interest rates must be raised too. So the BI rate will steadily move up from 6.5 percent to 6.75 percent in the first semester and to 7 percent by the end of 2010," he said.

    
(T.A014/A/HAJM/19:20/a014)

(T.A014/A/A014/A/A014) 04-02-2010 20:51:44

GOLKAR VOWS TO UNCOVER BANK CENTURY CASE

By Andi Abdussalam


        Jakarta, Dec 10 (ANTARA) - Golkar, a political party allied with the ruling Democrats and whose cadre chairs the House Inquiry Committee, vowed on Thursday to have the controversial Bank Century bailout case uncovered all-out.

        "The Golkar Party is determined to completely uncover the Bank Century bailout case so that the public will be able to see where the flows of the funds have gone to and to see if any procedural mistakes had taken place," Golkar Chairman Aburizal Bakrie said.

        Golkar Party cadre Idrus Marham was recently named chairman of a special House inquiry committee charged with the task of investigating alleged irregularities in the Rp6.7 trillion bailout of Bank Century.

        In this case, amid pessimism that the committee would perform well, the Golkar Party asked Idrus Marham not to have hesitate to uncover the case completely.

        "We have instructed him to reveal the real data so that a decision would not be taken based on slander," Aburizal Bakrie said after installing a chairman of the Golkar Regional Executive Board for West Java on Thursday.

        He also called on Idrus not to be afraid and bow to pressures, both pressures which would try to hamper the investigation or pressures in the form of slander. "I told him about this, especially with regard to his capacity as the House Inquiry Committee chairman," Aburizal Bakrie said.

        The Golkar chairman said he fully supported Idrus Marham's chairmanship of the special committee. "Let's pray for him so that others would also believe him and give him a chance. We should not speculate because speculations are not good," he added.

        Aburizal Bakrie said he was convinced that the Bank Century case could be disclosed. Therefore, he asked all parties to pray for him and not to have a prejudice against (his commitment). "We have to be optimistic in this life and we are confident the case can be solved," he said.

        In the meantime, former Golkar chairman Jusuf Kalla said he was confident Idrus Marham would perform well. "I am confident that Idrus Marham is able to do the job well. After all, the inquiry committee is being led by a collective leadership so that the leaders and members would provide mutual help and inputs," Kalla who is also a former vice president said.

        He said that he was also ready to provide explanations if he was invited by the inquiry committee. Yet he disagreed with certain quarters' view that he was a "crown witness" in the Bank Century case. "A lot of people could be summoned to testify in the case but no one could be called a 'crown witness'," Kalla said.

        However, he expressed optimism that the alleged corruption in the Bank Century bailout will be disclosed transparently. "I am certain it will be disclosed transparently because that is what President Susilo Bambang Yudhoyono and Vice President Boediono also want," Kalla said.

        Kalla said the Supreme Audit Board (BPK) and the House of Representatives (DPR) were also consistent in wanting to see the Bank Century case settled soon. "BPK and DPR have so far been consistently making every effort to deal with the case, and therefore I am optimistic that it can be disclosed transparently," Kalla said.

        Bank Century almost collapsed some time ago when its financial assets were taken overseas by major share-holder Robert Tantular. In order to help the ailing bank, the government provided it with bailout funds amounting to Rp6.7 trillion without the approval of the DPR.

        Legislators believed the government's decision to inject Rp6.7 trillion into the bank last year was a mistake and had the potential to cause a great loss on the state. After all, the State Audit Board (BPK) in its investigative report said there was an indication of irregularities in the Bank Century case.

        Thus, the House of Representatives agreed to set up a special committee to probe into the case. The 30-member House Bank Century Inquiry Committee which was formed on Dec 2 on Friday night last week elected Idrus Marham of the Golkar Party Faction as its chairman.

        However observers have doubts about the committee's commitment. Political observer Arbi Sanit of the University of Indonesia (UI) said he doubted whether the committee would perform well and effectively because it was led by a chairman who came from a party that had signed a political contract as a government supporter.

        Muhammad Idrus Marham of the Golkar Party was named its chairman while Golkar is one of the political parties which coalesced with the ruling Democratic Party in the House of Representatives.

        "As an executive of the party, though there is a difference of opinion, he would not adopt a stance that is different from that of the government," Sanit said.

        A similar view was expressed by Burhanuddin Muhtadi, a researcher of the Indonesia Survey Institute (LSI). Muhtadi said he was pessimistic that the committee would be able to reveal the truth about the Bank Century bailout case. Financial scandals which implicated political brokers involved many political parties where cartel politics played an important role.

        "Cartel politics leads lawmakers to mutually provide protection for each other ," Muhtadi said.

        However, according to Aburizal Bakrie, Golkar was determined to uncover the case.

        "I have already ordered Idrus and other Golkar cadres not to hesitate to act to solve the Bank Century case. They should not also hesitate to summon those linked to the case," he said.

        He said however that Golkar had not advised its members in the House to put the government or the president in a fix.

        "Golkar supports the government and it only hopes that the case could be immediately settled so that the government could run well without any hindrances and with support from all parties,"he said.***4*** (T.A014/A/HAJM/A/S012) 21:10/.... ) (T.A014/A/A014/A/S012) 10-12-2009 22:21:28

OBSERVER PESSIMISTIC ABOUT HOUSE INQUIRY

By Andi Abdussalam

Jakarta, Dec 6 (ANTARA) - The House Special Inquiry Committee that will investigate a controversial Rp6.7 trillion bailout provided by the government for Bank Century might not work maximally, observers say.         Most of the lawmakers grouped in the 30-member inquiry committee came from political parties which have signed political contracts of support with the government. After all, the political parties are involved in cartel politics that enabled them to seek and provide mutual protection, they say.         "I doubt whether the committee would perform well and effectively because it is led by a chairman who comes from a party that has signed a political contract as a government supporter," Arbi Sanit, political observer of the University of Indonesia (UI) said on Sunday.         Pessimism is also expressed by Burhanuddin Muhtadi, researcher of the Indonesia Survey Institute (LSI). He said that political parties in Indonesia were accustomed to cartel politics.         "I am pessimistic about the fate of the committee, even as of the very beginning, because many political parties in Indonesia had been trapped the cartel politics," Muhtadi said.         The House of representatives formed the inquiry committee on Friday after hearing a report of the State Audit Board (BPK) on its investigative audit of Bank Century that there was a suspected effort to engineer additional bailout funds (PMS) for the bank.         The case came up to the surface when Bank Century almost collapsed some time ago after its assets worth Rp11 trillion were transferred and stashed overseas by major shareholder Robert Tantular.         In order to help the ailing bank, the government provided it with bailout funds amounting to Rp6.7 trillion without the approval of the House of Representatives (DPR).         Arbi Sanit said that he had doubts whether the newly formed House Inquiry Committee would perform maximally in probing into the Bank Century bailout scandal because most of the committee members were political parties which had signed contracts with the government.         The 30-member committee appointed Muhammad Idrus Marham of the Golkar Party in its meeting on Friday (Dec 4.). The Golkar Party is one of the political parties which coalesced with the ruling Democratic Party in the House.         "As an executive of the party, though there is a difference of opinion, he would not adopt a stance that is different from the government's," Sanit said. He predicted that the voice of the parties in coalition in deciding the result of the inquiry committee, if it reached through a voting mechanism, would be inclined to support the government.         If the final results of the inquiry committee had been decided in this way, the public hope for the revelation of the real problem with the Bank Century case would not be satisfied, he said.         The same voice was also aired by LSI researcher Burhanuddin Muhtadi. He said he was pessimistic that the House Special Inquiry Committee would be able to reveal the truth with regard to the Bank Century bailout case.         "I became pessimistic about the committee since the very beginning because the political parties in Indonesia had been trapped in cartel politics," he said.         He said that even if it was chaired by lawmaker Gayus Lumbuun of the Indonesian Democratic Party of Struggle (PDIP) faction, the House Inquiry Commission would still not be free from political intrigues.         "This is because each of the political parties in the House already has the ace against their political opponents," he said.         According to Muhtadi, a PDIP cadre was also implicated in a bribery case with former Bank Indonesia (BI/central bank) senior deputy governor Miranda Goeltom.         "This is a part of old cases with Indosat, the sale of a VLCC tanker, and presidential instruction (issued by then President Megawati Soekarnoputri) No. 8 / 2002 that stopped the investigation of at least ten suspects in the BI liquidity assistance case," Muhtadi said.         The presidential instruction arranged the release and discharge which stated that debtors of the National Bank Restructuring Agency (BPPN) were exempted from debts.         Muhtadi said Golkar also faced the same thing where many old cases involved its cadres and had the potential to be used as a means of lobbying a political barter. The financial scandals which implicated political brokers involved many political parties. They usually kept silent if there was a 'just' distribution of money interest based on the proportion of their seats in the House of Representatives (DPR).         "Cartel politics leads lawmakers to mutually provide protection such as those in the cases of Bulogate 2 and Bank Bali sometime in the past," Muhtadi said. Thus, the only most probable achievement the House Inquiry Committee could make is to find a scapegoat or to determine that the Bank Century case is a civil case, he said.         He said that judging from the composition of the inquiry committee leadership and the interest of the House factions, there was a big possibility that the inquiry would run aground before reaching its goals.         In the meantime, a number of student activists over the weekend also expressed fear that the House inquiry into the Bank Century case could run aground. "There is an indication the inquiry will run aground before it reaches its objectives," Bambang M Fajar, chairman of the Muslim Student Association (HMI), said.         He said many members of the special inquiry committee were not the initiators of the petition. They even fought to chair the committee while they actually had given little to support the handful of legislators who had led the House inquiry initiative since the beginning.         The same concern was also expressed by Heni Lestari, presidium chairwoman of the Women Action Wing of the Indonesian Nationalist Student Movement (GMNI).         She regretted the success of certain political parties in including their cadres in the committee. "Therefore, there is no choice for us, elements of all community movements, but to launch mass rallies to guard the investigation process of the House committee," she said.***1*** (T.A014/a/H-NG/a014) (T.A014/A/A014/A/A014) 07-12-2009 01:06:42

BANK CENTURY NEEDS QUICK COURT SETTLEMENT

By Andi Abdussalam


        Jakarta, Dec 2 (ANTARA) - The Bank Century case should be investigated and taken to court as soon as possible so that the issue which involves a bailout of Rp6.7 trillion will not be used by irresponsible parties to spread slander and mutual suspicions.

        President Susilo Bambang Yudhoyono himself said he wanted the legal process involving Bank Century executives to be completed as soon as possible so that justice could be upheld.

        "I have told government officials and law enforcers that I want the legal process against the Bank Century executives to be expedited. If two of them have fled, they have to be tried in absentia," the president said when spoke to the 23rd Women's Congress on Wednesday.

        The president made the remarks only one day after the House of Representatives (DPR) approved a proposal of over 500 legislators to use their inquiry right to investigate the bank's bailout.

        The House itself will form a special inquiry committee on Friday (Dec. 4, 2009) to look into the bailout after the State Audit Board (BPK) had reported it suspected there had been an effort to engineer additional bailout funds (PMS) for the bank.

        There had been allegations that President Yudhoyono's electoral campaign team was one of the parties had received funds from the flows of the bailout transfers. The president said that the allegation was a character assassination attack on his electoral campaign team.

        "There is a campaign of exaggerated slander and character assassination. It is said an amount of Bank Century funds was transferred to the SBY presidential election success team. I can say now none of my electoral success team members had desired, much less received a single rupiah from an illegal fund," the president said.

        Therefore the president called for immediate investigation and legal settlement of Bank Century so that its case would be brought to light and existing suspicions would be eliminated.

        "I want the handling of this case to be accelerated and hopefully with the support of all sides, the court proceedings will not last too long so that a better solution to solve all this could be made," the president said.

        This is to avoid further slander. On Tuesday, Chief Security Minister Djoko Suyanto reported a non-governmental organization to the Jakarta Police for defamation with regard to the Bank Century case.

        On the occasion, Djoko Susanto was accompanied by Coordinating Minister for Economic Affairs Hatta Radjasa, Sports and Youth Affairs Minister Andi Mallarangeng and lawyer Amir Syamsuddin.

        The names of Djoko Suyanto, Hatta Radjasa, Andi Mallarangeng (Yudhoyono's electoral campaign team members) and a number of institutions and political parties were mentioned by the West Java - Jakarta Activists Network as the parties that had received Rp1.8 trillion in Bank Century funds.

        According to Yudhoyono, his electoral campaign team was currently the target of a character assassination attack that had gone too far in connection with the Bank Century bailout case.

        He said that Indonesia as a law-abiding nation should uphold justice in its efforts disclose the truth, not through the slander now being spread by irresponsible parties.

        "We want all this to be brought to light. Let us make everything clear. The House of Representatives will use its right of inquiry to follow up the findings of the State Audit Board (BPK). That would be good. Make everything clear. So, please disclose the truth and the facts but don't disseminate slander," the president said.

        Yudhoyono said he wanted the legal process involving Bank Century executives to be completed as soon as possible so that justice could be upheld. "I want the handling of this case to be accelerated and hopefully with the support of all sides, the court proceedings will not last too long so that a better solution to solve all this could be made," the president added.

        The president said that the government had also asked that Bank Century assets flown and stashed in a number of countries worth Rp11 trillion should be frozen and be returned to the state and people.

        The case came up to the surface when Bank Century almost collapsed some time ago after its assets worth Rp11 trillion were flown and stashed overseas by major share-holder Robert Tantular. In order to help the ailing bank, the government provided it with bailout funds amounting to Rp6.7 trillion without the approval of the House of Representatives (DPR).

        Besides a special House inquiry committee, the case will also be investigated by the Corruption Eradication Commission (KPK).

        The KPK has asked for cooperation from the Financial Transactions Reporting and Analysis Center (PPATK) to help investigate alleged crimes in the bank. According to Acting KPK Chief Tumpak Hatorangan Panggabean, his commission had written to the PPATK with regard to the cooperation to investigate the case.

        "Yes, we have. I signed the letter yesterday," Tumpak said on the sidelines of a national conference on corruption eradication efforts.***4*** (T.A014/A/HAJM/19:55/A/O001) (T.A014/A/A014/A/O001) 02-12-2009 20:04:21

HOUSE APPROVES BANK CENTURY MOTION

By Andi Abdussalam

Jakarta, Dec 1 (ANTARA) - A special committee to investigate the Bank Century case will be officially formed later this week after the House of Representatives (DPR) at a plenary session on Tuesday approved a legislators' motion to use their right of inquiry on the ailing bank's bailout with Rp6.7 trillion.         "The House will set up the special inquiry committee on Friday (Dec. 4, 2009). It will be composed of 30 House members from various party factions," House Speaker Marzuki Alie said on Tuesday.         The House speaker said he hoped all House factions would have submitted the names of their representatives for the inquiry committee before December 4.         The composition of the 30-member inquiry committee would be based on the proportionality principle with the number of faction representatives in the committee to be determined in accordance with the size of the factions concerned.         The event marks the first time for the House of the 2009-2014 period to exercise its right of inquiry. The House of the 2004-2009 period used this right several times on different issues but the proposal for an inquiry into the Bank Century case now was supported by a record number of legislators - 503 out of the House's 560 members.         Initially, the number of lawmakers supporting the initiative was only between 200 and 300, but after the ruling Democrat Party expressed its support for the proposal, the number of supporters rose to over 500.         With the overwhelming support, deliberations on using the House's right of inquiry on the Bank Century case at Tuesday's House plenary session proceeded smoothly and at 11.25 am, the session's chair officially declared the proposal approved.         Based on the proportionality principle, the Democrat Party (PD) would amongst others be represented in the committee by eight cadres, Golkar by six cadres, the Indonesian Democratic Party-Struggle (PDIP) by five, the National Mandate Party and Prosperous Justice Party by three cadres each, the United Development Party (PPP) and National Awakening Party (PKB) by one cadre each.         The House will form the inquiry committee after hearing a report by the State Audit Board (BPK) on its investigative audit of Bank Century which indicated a suspected effort to engineer additional bailout funds (PMS) for the bank.         "The Rp6.7 trillion bailout funds were disbursed in four stages. But the disbursement of the second phase worth Rp2.2 trillion was done without consultations with the Coordination Committee (KK). This was against LPS Regulation No. 3/PLPS/2008," Hadi Poernomo said after handing over the BPK audit report on Bank Century to House Speaker Marzuki Alie last month.         Bank Century almost collapsed some time ago when its assets were flown overseas by major share-holder Robert Tantular. In order to help the ailing bank, the government provided it with bailout funds amounting to Rp6.7 trillion without the approval of the House of Representatives (DPR).         In order to carry out its inquiry, the special committee is expected to examine the flow of the bailout funds through the Financial Transactions Reporting and Analysis Center (PPATK).         In this case, the PPATK has asked for a legal guarantee so that in providing the formation needed it would not breach any law. "We need a strong and clear legal basis in providing such information," PPATK Chief Yunus Husein said here on Tuesday.         He said in providing information needed for the implementation of a House inquiry into the Bank Cenutry bailout, he had never received any pressure from any body or any party.         This does not means that the agency will be hampering the investigation. PPATK has demonstrated that it fully supported the auditing of Bank Century case by the State Audit Board (BPK) and provided with the information from the beginning.         Therefore, PPATK also supported the inquiry by the House of Representatives (DPR) based on the regulations in force. Husein however denied reports that the bailout funds for Bank Century had been flown to certain individuals and institutions.         PPATK has no such information and has never provided information about funds flows to any one. Husein said that the people should understand that information owned by PPTAK was confidential in nature based on articles 10A and 17A of Law No. 25 / 2003 on Money Laundering.         In the meantime, the Indonesian Legal Aid Institute Foundation (YLBHI) has called for the settlement of the Bank Century bailout case in court to prevent it from dragging on indefinitely.         YLBHI board chairman Patra M Zen said by settling the Bank Century case in court, many problems in the country would be solved, and there would be an indicator of the success of the law enforcement, auditing and supervisory agencies in investigating financial transactions.         In addition, completing the case in court would also be a test for the government's commitment to upholding the truth and meeting the public's sense of justice, M Zen said.         "If this case is allowed to drag on, people's suspicions would only grow and public trust in the commitment of the SBY-Boediono government would drop. The market is also very sensitive to the Bank Century case and therefore it is hoped the matter will be solved soon," he said.         On Tuesday, as the House was holding a plenary to decide whether it would approve the legislators' motion or not, students grouped in the Indonesian Islamic Students Association (HMI) of Subang in West Java urged the House to expedite the establishment of a House special inquiry committee to probe Bank Century.         "The committee must be composed of legislators who have good integrity and capacity to expose the Bank Century case," field coordinator of the rally Bani Nur said.***1*** (T.A014/A/HAJM/A/S012) 20:04/.... )         (T.A014/A/A014/A/S012) 01-12-2009 20:41:39

ANTABOGA ASSETS, BANK CENTURY NEED SEPARATE PROBING

By Andi Abdussalam

Jakarta, Nov 28 (ANTARA) - Antaboga Delta Sekuritas investors, whose money has been stolen and stashed abroad by the security company's owner Robert Tantular, could now hope with worries for the return of their money.         The assets worth Rp11.6 trillion , whose withdrawal caused the collapse of Bank Century, have reportedly been frozen overseas.         According to a legislator, the assets have reportedly been frozen so that what remains to be done is to make administrative arrangement before the funds could be taken home and be returned to the Antaboga investors.         "With Assets worth Rp11 trillion, I think the Antaboga investors should not worry about their money. What remains to be done is to settle administrative matters, take back the assets and paid them," Achsanul Qosasih, deputy chairman of the House of Representatives (DPR)'s Commission XI for financial affairs, said over the weekend.         The Antaboga case of asset flight to overseas has caused the collapse of Bank Century through which Antaboga has sold its security products to its customers.         Ailing Bank Century was later safeguarded by the government through the Deposit Insurance Agency (LPS) with a bailout fund amounting Rp6.7 trillion. The bailout sparked public criticism and questions as it was disbursed without approval of the House of Representatives (DPR).         The bailout case would be looked into by a House inquiry committee that will be formed next month while assets flown abroad would be investigated by police and the Attorney General's Office (AGO).         Therefore, the Ministry of Foreign Affairs, Attorney General's Office (AGO) and Police must be able to retrieve immediately the assets stashed by Robert Tantular abroad.         "The assets worth Rp11 trillion and deposited by Robert Tantular in several countries should be traced and retrieved so that Antaboga Delta Sekuritas investors' stolen money could be refunded," Achsanul Qosasih said.         The embezzlement case of Antaboga Delta Securitas investors' money should be given a serious attention and a special treatment. Its handling must be separated from the bailout case because embezzlement is a crime.         "This is a clear deception committed by Rebert Tantular, former major share holder of Bank Century, through his security company Antaboga," Qosasih, a politician of the ruling Democratic Party, said.         He said that the case of Antaboga customers could not be settled with a bank case approach, much less if it is handled together with the settlement of Bank Century.         "So, the steps to settle Antaboga investors' problem is to freeze Robert Tantular's assets overseas, bring them back to Indonesia and pay the investors' money," he said.         The attorney general's office itself has stressed that it would focus on the criminal aspect of Bank Century. It will only handle Bank Century assets flown and stashed overseas worth Rp11.6 trillion.         "We are still focusing on Bank Century funds that have fled abroad," Junior Attorney General for Special Crimes Marwan Effendy said. He said the AGO would only handle embezzled assets whereas the bailout funds provided to the bank did not involve any criminal elements.         After all, according to the Deposit Insurance Agency (LPS), the bailout funds worth Rp6.7 trillion provided for Bank Century are taken from the premiums of its members.         Premiums paid by LPS member banks since September 2005 have totaled Rp12.5 trillion while its assets have accounted for Rp18 trillion. "So, if the amount is deducted by Rp6.7 trillion, the government's money would still remain intact," Executive Chairman of LPS Firdaus Djaelani said. Moreover, the government's capital participation in the LPS is only worth Rp4 trillion.         So, the main problem that has to be solved immediately is the assets flown and stashed overseas by Robert Tantular.         In this case, Qosasih said, the House Commission XI appealed to the people who were cheated by Antaboga Delta Sekuritas to do their best in helping the attorney general's office, the foreign ministry and police so that the assets stashed abroad could be sent back to Indonesia.         On the other hand, he said, the Bank Century bailout case should be handled by the House through an inquiry committee, which is expected to be established early in December 2009.         He said that the Bank Century and Antaboga cases should not be mixed up. Bank Century is not responsible for Antaboga investors. Antaboga investors only transferred their funds through Bank Century because Antaboga sold its products through the bank.         "The funds are not deposited at Bank Century but were transferred through the bank to Antaboga, which is as a security firm. So, the case of Antaboga and Bank Century should be separated ," Qosasih said.         He said that priorities should be given to the settlement of Antaboga case, and in this case the House inquiry committee could help investigate and solve the problem only in administrative form.         In the meantime, Eko B Supriyanto, director of InfoBank Research Bureau, has suggested that Antaboga investors lodge a lawsuit against Antaboga Delta Sekuritas.         They cannot ask their funds to LPS or to Bank Mutiara (Bank Century) because LPS only pays compensation for a banking product. Products guaranteed by LPS are only bank products such as savings, deposit and demand deposit. After all, products issued by Antaboga Delta Sekuritas are non bank ones.         "Because they are non-banking products, Antaboga investors' funds are not included in the LPS guarantee scheme. As a consequence, the bank and LPS may not refund the investors money invested with Antaboga," he said.***4*** (T.A014/A/f001) (T.A014/A/A014/F001) 28-11-2009 14:14:36

INVESTIGATION NOT FOCUSED ON BANK CENTURY CASE

By Andi Abdusslam

Jakarta, Nov 23 (ANTARA) - The State Audit Board (BPK) handed over the results of its audit on the Bank Century case to the House on Monday but observers said it was not much focused on the flows of the much criticized bailout funds amounting to Rp6.7 trillion.

        "Actually, the public is waiting for the exposure of the fund flows," economic observer Fadhil Hasan said.

        The observer commented on the BPK report on its investigation into the Bank Century case, which according to its chairman Hadi Poernomo, had involved violations and efforts to engineer the disbursement of Rp6.7 trillion bailout to the ailing bank.

        The Indonesian Corruption Watch (ICW) said the investigative audit by BPK on Bank Century must be able to expose the flows of funds and the parties who benefited from the banking scandal.

        ICW Coordinator Danang Widoyoko said in a press statement on Monday that the interim report of BPK on September 26, 2009 had raised public concern because it seemed that the BPK investigation did not focus on indications of corruption as requested by the Corruption Eradication Commission (KPK).

        He said that the preliminary report only talked much about efforts to salvage Bank Century, namely something behind the disbursement of the bailout funds amounting to Rp6.7 trillion through the Short-Term Funding Facility (FPJP).

        Bank Century was taken over by the Deposit Insurance Agency (LPS) late last year after it was facing liquidity and default problems. The government later provided it with a bailout of Rp6.7 trillion, far higher than the Rp1.3 trillion discussed with the House.

        The Corruption Eradication Commission (KPK) has asked BPK to audit the bank case to make sure no irregularities had been involved in it.

        BPK chairman Hadi Poernomo, after handing over to the House his audit report on Monday explained that there were alleged violations with the Bank Century case. He said that the violations concerned with the bank's merger process and Bank Indonesia (BI/the central bank) supervision.

        He said that violations also included the granting of the Short-Term Funding Facility (FPJP) funds, the naming of Bank Century as a failed bank that could cause a system impact, the use of FPJP funds and the injection of interim capital (bailout) as well as unsound practices in the bank's management.

        According to the investigative audit, there was a suspected effort to engineer the raising of the bailout amount, which was initially estimated at between Rp632 billion and Rp1.3 trillion to Rp6.7 trillion.

        "The Rp6.7 trillion bailout funds were disbursed in four stages. But the disbursement of the second phase worth Rp2.2 trillion was done without consultations with the Coordination Committee (KK). This was against the LPS regulation No. 3/PLPS/2008," Hadi Poernomo said after handing over the BPK audit report on Bank Century to House Speaker Marzuki Alie here on Monday.

        Based on the BPK audit, additional bailout funds for Bank Century have been engineered so that the bank would get injection not only to meet its capital adequacy ratio (CAR) requirement but also its need for increased liquidity.

        The BPK also found that Bank Indonesia (BI/the central bank) and the Financial System Stability Committee (KKSK) did not apply measured criteria in concluding that if Bank Century was allowed to collapse, it would have a systemic impact on the banking world.

        Poernomo said that Bank Century was taken over by the LPS only based on Government Regulation in lieu of Law No.4/2008, and without comprehensive, measured and latest data on the bank's condition.

        Likewise, KKSK's decision that Bank Century had become a failed bank where it did not mention the costs the LPS had to incur, also violated LPS Regulation No. 5/LPS/2006, he said.

        After all, Hadi Poernomo said, the Rp5.86 trillion loss suffered by Bank Century was a loss which emerged as a result of unsound practices and violations committed by the bank's executives and other parties.

        "The bailout provided by LPS to cover the loss suffered by Bank Century is actually state money," the BPK chairman said.

        In spite of this,Fadhil Hasan said that the BPK investigative audit on Bank Century was not much focused on the flows of the bailout funds. The BPK audit was not able to expose Bank Century's fund flows because it was not allowed the Financial Transaction Analysis and Report Center (PPATK) to trace them.

        Yet, he said, the result of the BPK audit had indicated that BI and by the Financial Sector Policy Committee (KKSK) had taken less appropriate decisions in bailing out Bank Century.

        According to Hadi Poernomo, BPK has virtually touched on the flows of the funds but not all of the fund flows could be traced because data about them were restricted. "We cannot expose the flows of the funds because based on Article 26 of Law on Financial Transaction Analysis and Report Center (PPATK) only the police and public prosecutors are allowed to investigate flows of funds," the BPK chairman said.

        Therefore, according to Fadhil Hasan, the House should follow up the Bank Century case with an inquiry.

        "The public is waiting for the exposure of the fund flows," he said. To solve the problem, Fadhil hoped that the House would approve the initiative of a group of legislators to conduct a House inquiry on the alleged bank scandal.

        "The House inquiry should be continued to trace the flows of the funds so that rumors would not emerge and spill over to everywhere," he said. ***4*** (T.A014/A/HAJM/A/S012) 21:15/..... ) (T.A014/A/A014/A/S012) 23-11-2009 21:43:15

INQUIRY NEEDED TO PROBE BANK CENTURY CASE

By Andi Abdussalam

Jakarta, Oct 29 (ANTARA) - When ailing Bank Century was taken over by the Deposit Insurance Agency (LPS) in September last year and the government moved by providing bail-out funds totaling Rp6.7 trillion , the bank's customers hoped they would get their money back soon.

        However, the bank's customers had hoped in vain because until now, none of them has received refunds on his or her deposit. As a consequence, many of them suffered extreme stress while others attempted or committed suicide. Where did the Rp6.7 trillion in bailout funds go?

        These facts raised serious questions among the public. People then also questioned the legal basis of the decision to provide the bailout funds in such a huge amount. The initial bailout amount discussed with the House of Representatives (DPR) was only Rp360 billion - Rp1.3 trillion.

        The public discourse on the Bank Century case lately focused on the possibility of crimes having been committed in it. Moreover, former Vice President Jusuf Kalla early last month said that he had all along been against bailing out the bank as it would amount to "plain robbery."

        A preliminary report to the House by the State Audit Board (BPK) also indicated that crimes had been committed in the Bank Century case. However, the Attorney General's Office said there were no indications of potential crimes in the BPK's report.

        Therefore, an inquiry into the case by a DPR special committee was deemed necessary to assist the BPK in its investigation. "The use of the House's inquiry right can help BPK complete its probe into the matter," economic observer Dr Drajad Wibowo said.

        Wibowo said he had suggested that the DPR use its inquiry right because there was inconsistency between the BPK report and the statement by the Attorney General's Office. BPK's investigative audit results indicated there were crimes while the statement of the deputy attorney general for special crimes said there was no potential crime in the report.

        Indications of criminal offenses in the Bank Century case were revealed during a closed-door meeting of the DPR's Commission XI for financial affairs on Sept. 29, 2009 on the interim report of BPK. The House found that various banking crimes had taken place with the bank.

        "The banking crimes included misappropriation of promissory notes, fictitious credits, violation of the maximum limit of credit provision (BNPK), fictitious spending and violation of the foreign exchange reserves requirement," Commission XI chairman Achmad Hafiz Zawawi said after the meeting.

        The BPK's interim audit report also indicated that abuse of authority or error of judgment by Bank Indonesia (BI/the central bank) and the Financial Sector Stability Committee (KSSK) had also occurred causing the state to suffer conisderable financial losses.

        Besides, there was an error of judgment at a meeting of the KSSK which had concluded that a collapse of Bank Century could have a systemic impact so that the injection funds which initially only amounted to Rp630 billion were increased to Rp6.76 trillion.

        After all, the funds were disbursed under Government Regulation in lieu of Law No. 4 / 2008 on Financial System Safety Net (JPSK) which basically was never approved by the House.

        With such a condition where the Attorney General's Office said there was no potential crimes involved, the DPR should form a special inquiry committee to help BPK complete its audit.

        "An inquiry committee by DPR could help BPK complete its investigation," Drajad Wibowo said on the sidelines of a discussion on the establishment of a special committee on Bank Century scandal.

        In order to bring light to the case, Megawati Soekarnoputri, leader of the Indonesian Democratic Party of Struggle (PDIP) ordered her cadres in the House to use their inquiry rights to investigate the disbursement of the Rp6.7 trillion bailout.

        "The PDIP leader made the instruction in a leadership meeting today and it has been the party's decision," PDIP Secretary General Pramono Anung said on Wednesday (Oct 28, 2009).

        Besides, PDIP will also set up a fact-finding team with the party to gather information on the real case of Bank Century so that the public would have transparent information about the Bank Century problem.

        Pramono Anung said the PDIP faction in the House was serious with the formation of the inquiry committee but admitted this could not be done by the PDI faction alone. Therefore, Anung who is also a DPR deputy would lobby and hoped that other factions would support the initiative.

        In the meantime, the United Development Party (PPP) faction said it was ready to support the establishment of a House special inquiry committee to thoroughly investigate the Bank Century case.

        "We support efforts to probe into the Bank Century case and the efforts should be made as soon as possible ," Lukman Hakim Saefuddin, PPP Chairman, who is also a deputy of the People's Consultative Assembly (MPR), said.

        He said that the BPK auditors had said they had found irregularities in the disbursement of Rp6.7 trillion to bail out the bank. The bailout amount was far bigger than the Rp1.3 trillion previously agreed with the House.

        Lukman said the case must be followed up even if the BPK had not yet complete its investigation, and it was still facing difficulties in tracing the transfers of Bank Century customers' funds.

        PPP faction chairman in the House Hasrul Azwar said his faction was ready to sponsor the establishment of the inquiry committee.

        However, the faction chairman of the the Prosperous Justice Party (PKS) in the House, Mustafa Kamal is of the view that the results of the BPK auditing should be waited for before an inquiry committee was established.

        He said there was a special mechanism that had to be met first such as deliberations in the DPR's Consultative Board and plenary sessions before the House could officially set up the committee.

        "The PKS faction calls on us all to wait for the investigative auditing results of the BPK. We have asked it to do it. So, let's give it a chance to accomplish its task," he said.***1*** (T.A014/A/HAJM/17:00/a014)

BPK TO AUDIT BANK CENTURY

By Andi Abdussalam

Jakarta, Aug 29 (ANTARA) - The State Audit Board (BPK) is soon to audit ailing Bank Century into which the government has injected fresh funds totaling Rp6.7 trillion or far in excess of the Rp1.3 trillion the government had previously mentioned to the House of Representatives (DPR).

        "BPK will soon follow up a request for the auditing of the bank. We actually have began a preliminary investigation which is expected to be completed before the end of this fasting month. After the fasting month, we will carry out examinations on every details," BPK's chief auditor Syafri Adnan Baharuddin said.

        The audit board will carry out an investigative audit in details of Bank Century after the fasting month (August 22 - September 20) based on the request of the House of Representatives (DPR).

        House Commission XI on financial affairs has questioned the legal basis for the government to disburse an additional bailout fund of Rp5.4 trillion for Bank Century through the Deposit Insurance Agency (LPS). The government has initially asked the approval of the House to bailout the ailing bank with Rp1.3 trillion.

        "The figure we discussed in our latest hearing was Rp1.3 trillion. How could the Rp1.3 trillion all of sudden swell into Rp6.7 trillion. What we are questioning is its legal basis," Commission XI Chairman Ahmad Hafiz Zawasi said.

        However, BPK is not questioning the injection of Rp6.7 trillion alone, but all matters that caused the bank to collapse. "We are not suddenly questioning the injection fund but we are going to see why it has collapsed and why Bank Indonesia (BI/the central bank) did not give a warning," chief auditor Baharuddin said.

        He said that BPK examined BI and LPS's financial balance. The audit board is actually already able to draw a number of preliminary conclusions with regard to the Bank Century case.

        BPK has also consulted BI and the LPS with regard to its preliminary findings, and promised to deepen its investigation into the bank case.

        "We are trying to map out the data before moving forward to more detailed examinations. What was questioned by the House yesterday (at a hearing on Thursday) would strengthen BPK's auditing process of Century Bank," Baharuddin said.

        He said that BPK was not in a position to decide which party had made the mistake in the Century Bank case. "We are not in a position to blame any party. But we would like to explain that our preliminary examination indicated that there is another aspect that has to be disclosed," Baharuddin said.

        In the meantime, Baharuddin Aritonang, another BPK auditor, said that the House could soon made a request to BPK for the auditing of Century Bank. ?If the DPR makes the request, we have to audit it immediately,? he said.

        Dradjad H Wibowo of Commission XI of the House of Representatives said meanwhile that LPS might suffer a loss of Rp5 trillion when Century Bank divested its shares later on. "In my estimate Bank Century's shares are worth only about Rp1.5 trillion to Rp2 trillion. LPS must divest the bank's shares in three years at the latest, namely in 2011. This means that with an equity now at rp500 billion, LPS will suffer a loss of about Rp4.5 trillion to Rp5 trillion if it is later sold at Rp1.5 trillion to Rp2 trillion," Dradjat Wibowo said at a hearing with Finance Minister Sri Mulyani Indrawati on Thursday.

        He said that with equity amounting to Rp500 billion, the value of Bank Century shares when it was sold in 2011 would only reach about Rp1.5 trillion to Rp2 trillion, and this proceed would not be comparable to the amount of funds injected to the bank at Rp6.7 trillion.

        Therefore, he questioned the big amount of bailout funds injected into the bank. "We should examine whether there is a close relation between Century Bank officials and decision makers in the government," Wibowo said.

        He said that initially the government and BI only asked the approval of the House to set Rp1.3 trillion in bailout funds through the LPS for the bank but in its realization the amount swelled to Rp6.7 trillion.

        "We need clarifications on the details of matters that caused the swelling of the injected funds," he said.

        At Thursday hearing, Finance Minister Sri Mulyani Indrawati admitted that the injected funds came from the LPS, none of it came from the Emergency Funding Facility (FPD), "Up to now, BI has never used funds from FPD and funds which had implications with the state budget. All are made based on the consequence of LPS and based on the LPS legal corridor," the minister told the House hearing.

        The House raised concern that the swelling of the bailout injection fund would deplete significantly the funds of LPS so that tighter control over the deposit insurance agency is needed.

        The minister explained the chronology which led to the bailout of Bank Century amounting to Rp6.7 trillion. On November 21, 2008, the Financial System Stability Committee (KSSK) declared Bank Century a failed bank, which if not handled properly would create a systemic impact. On the occasion, the handling of the bank was also handed over to LPS.

        "Up to now, BI has never used the FPD funds so that there is no implications with the state budget," the minister said. ***2*** (T.A014/A/HAJM/17:50/A014)