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Indonesian parliament orders criminal probe into bank bailoutPosted: 04 March 2010 0057 hrs

JAKARTA: Indonesia’s Parliament on Wednesday recommended a criminal investigation into the country’s top two economic reformers for authorising a bailout of PT Bank Century in 2008.

The bailout of PT Bank Century was approved by Finance Minister Sri Mulyani Indrawati and Vice President Boediono.

Most lawmakers viewed the bailout as unjustified and allegedly involved corruption at various levels.

A parliamentary special committee on Tuesday failed to come up with a unanimous conclusion after conducting months-long investigation into the bailout.

The pressure on President Susilo Bambang Yudhoyono increased after lawmakers from five out of nine parties called for a criminal probe into Boediono and Sri Mulyani.

The lawmakers – who included members of coalition partners Golkar and the Prosperous Justice Party – accused the pair of “abuse of power” in a 724-million-dollar rescue package for Bank Century, which they allege caused huge losses of state money.

The most respected economic brains in Yudhoyono’s cabinet, Boediono and Sri Mulyani have been under intense pressure after the state’s top auditor said he had found strong indications of “violations” in the 2008 bailout.

The lawmakers’ debate this week have been accompanied by street protests in several cities over the past two days.

Protesters in Jakarta on Wednesday hurled bamboo sticks at police outside parliament and students in the South Sulawesi city of Makassar damaged vehicles and blocked main roads, causing massive traffic jams.

The controversy has put Yudhoyono in a difficult position, forcing him to decide between keeping his two colleagues or preventing his coalition from disintegrating, analysts said.

“SBY needs solid political support as he still has four years ahead to rule the country,” Bantarto Bantoro from the Centre for Strategic and International Studies (CSIS) said, referring to Yudhoyono by his initials.

Analysts say that, despite some lawmakers’ support for the move, it is unlikely Yudhoyono will allow the investigation to take place or suspend the pair.

“The president can’t be politically forced to suspend the two figures if there’s no legal proof that they had broken laws or misused funds,” Standard Chartered Bank economist Fauzi Ichsan told AFP.

“The country’s economy will suffer without them. these two reformers are highly respected by the domestic and international market,” he added.

At the height of the global economic crisis in late 2008 Yudhoyono’s government said the bailout was necessary to prevent a “systemic economic meltdown.”

But members of former ruling party Golkar and the Muslim-based Prosperous Justice Party have joined the opposition Democratic Party of Struggle (PDI-P) in pushing for Sri Mulyani and Boediono to be prosecuted after the state auditor’s report was released.

Yudhoyono will have to decide if it is best for the parties to stay together or go their separate ways, analyst Pande Raja Silalahi said.

“The coalition is on the verge of breaking up… there will be a deadlock today,” he said, adding that the president should settle the issue quickly.

Yudhoyono has defended his colleagues, saying he accepted responsibility for a decision necessary to save the country’s entire banking sector.

Yudhoyono was re-elected in 2009 on the back of promises to root out corruption, which riddles every aspect of Indonesian public life from the courts to the customs office. – AFP/de