"I expressed a lot of disappointment with the poor governance of Bank Century and why it (the change in figures) emerged after being taken over by LPS," Sri Mulyani told the court.
Jakarta (ANTARA News) - Former Finance Minister Sri Mulyani said she was disappointed with the quality of data given by the Central Bank about Bank Century after the scandal hit lender was categorized as a failed bank with systemic impact in 2008.

"The fact was at that time I was very disappointed with the quality of the BI (Bank Indonesia) data, but as a finance minister I knew what was at stake. I then asked BI to assume professional responsibility for the figure given to the Financial System Stability Committee (KKSK)," Sri told the Jakarta Corruption Court here on Friday.

At that time Vice President Boediono was the governor of the Central Bank.

Sri Mulyani was testifying at the court trying former deputy governor of the central bank Budi Mulya as a suspect .

Sri Mulyani was the finance minister from 2005 to 2009 and chairman of KKSK that declared Bank Century as a failed lender which could triggered bank rush that it had to be taken over by the Deposit Insurance Agency (LPS), which is accountable to the president.

Sri Mulyani said she was especially disappointed with changing figures for Bank Centurys capital adequacy ratio from minus 3.53 percent on Nov. 21 in 2008 to minus 35.92 percent in three days after it was under LPS.

"I expressed a lot of disappointment with the poor governance of Bank Century and why it (the change in figures) emerged after being taken over by LPS," she told the court.

She said her concern was mainly over the financial strength of LPS in facing the financial crisis.

LPS had only Rp14 trillion available to cover up to Rp1,000 trillion of Rp1,700 trillion of the public deposits in banks at that time.

"As a decision maker, I was very concerned as LPS had only Rp14 trillion. In case of run on bank LPS had no ammunition to deal with the problem. I had to prevent a repeat of the 1997-1998 crisis," she said.

When Bank Century was declared a failed bank with systemic impact, BI needed only an additional fund of Rp632 billion, she added.

With the additional amount needed was only Rp632 billion and LPS had Rp14 trillion in hand it would be safe , but information from Taxation Director General Pak Darmin said the amount of fund needed for Bank Century swelled, she said.

"To compound the problem was Bank Indonesia said there were 5 more banks having similar condition as Bank Century and 18 other banks were facing liquidity problem," she said.

The reason for the swell in additional capital needed by Bank Century was that Bank Indonesia excluded a number of securities of Bank Century as valueless assets.

According to the new president of Bank Century Maryono there were non performing securities and fictitious assets that the bailout fund needed swelled from Rp632 billion to Rp2.6 trillion, Sri Mulyani said.

"I questioned the judgement . Why the information came up after Bank Century was declared as a failed bank and why Bank Indonesia failed to detect fictive accruals whereas Bank Century was as already under intensive supervision since 2005. I questioned the effectiveness of BI supervision," she said.

Bank Century scandal caused a loss of Rp7.4 trillion in state fund, the Supreme Audit Agency (BPK) has said.

The loss was a result of short term loan facility (FPJP) to Bank Century , and the determination of the ailing lender as a failed bank, which have potential systemic impact, BPK chairman Hadi Poernomo said .

The government defended the granting of the FPJP and the determination of Bank Century as a failed bank saying allowing the bank to collapse could trigger run on bank amid the global financial turbulence in 2008.

The House of Representatives, however, decided the bail out illegal, a decision that led to legal investigation by the Corruption Eradication Commission (KPK).

The anti graft body has also questioned Vice President Boediono, who was seen as the most responsible for facilitating the bail out.

"Based on the investigative audit, BPK came to a conclusion, there had been malfeasance committed by related officials in granting the FPJP from Bank Indonesia to Bank Century causing a loss of Rp689.3 billion in Nov. 2008 and in determining Bank Century as a failed bank that could trigger systemic impact that cause a loss of Rp6.76 trillion, which were given as a capital participation by LPS (state-owned Deposit Insurance Agency) in Bank Century from 24 Nov 2008 to 24 July, 2009," Hadi Poernomo said.

BPK has submitted a report of an investigative audit of state loss to KPK presenting all details of alleged wrongdoings with officials as the policy makers.

"All are clear in the report who is doing what, but we could not name one by one," he said.

Budi Mulia was charged with facilitating the granting of the bail out fund by LPS although the bank did not meet the criteria to be entitled to capital participation by LPS.

At that time the bank had only a capital adequacy ratio of 2.02 percent much below the minimum limit of 8 percent to be entitled to FPJP.

Bank Indonesia even changed the criteria, its own regulation , to allow the bank to receive the FPJP.

Observers said the bank was bailed out not for the sake of the bank but to recover the funds of big depositors among the government supporters ahead of the presidential election in 2009.

The bank collapsed after being robbed by its owners draining it of cash including funds belonging to its depositors .

Some of the owners fled the country .(*)

Editor: Heru Purwanto
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