SBY claims responsibility for bailout

(News Terupdate) - For the first time since the Bank Century case came to light, the President said Monday the government’s move to save the bank was the “correct” decision and that he was “responsible” for it.

The House of Representatives’ inquiry committee will have its final say on the Rp 6.76 trillion (US$716 million) Century bailout on Tuesday.

“And I am responsible for it although the technical operation was done by state officials who were authorized by law. Although I did not make the decision or give the order, I‘d say the move was correct,” President Susilo Bambang Yudhoyono said at a meeting with representatives of national banks at the State Palace, Jakarta.

The meeting was also attended by Coordinating Economic Minister Hatta Rajasa, Finance Minister Sri Mulyani Indrawati, Industry Minister Mohamad Suleman Hidayat and Trade Minister Mari Elka Pangestu.

Yudhoyono told the bankers that global economic conditions in November 2008, when the decision to bail out the bank was made, were uncertain.

The President was at a G20 meeting in Washington, DC, while Mulyani and Boediono — then Bank Indonesia governor — were in Jakarta.

“Although I was not in the country at the time; and although the Bank Indonesia governor and the finance minister did not have to ask for my approval, I’d say what had to be done to save our banking sector was correct,” Yudhoyono said.

He said the decision should be judged based on economic development after the bailout.

“To measure whether a decision was correct or not, it is not black or white,” he said. “But using commonsense, did our economy fall again [like in 1998] or survive?”

Official data shows that the economy grew 6.1 percent in 2008, and 4.5 percent in 2009 amid the global economic downturn.

Yudhoyono added the committee should have invited bankers to make testimonies on the bailout.
“I expect the banking community could have contributed, and allowed the inquiry committee to
see the issues on the whole and made a conclusion that would help all of us build a better economy,” he said.

Whatever outcome is reached by the committee, he added, he would respond according to the law.
“If we keep on taking a wait-and-see approach, the real sector and the economy won’t move. How can poverty rates and unemployment rates decline? [They] can dislike the President, but not the people,” he said.

At the meeting, bankers threw their last-minute support behind the controversial decision to bail out Bank Century.

“All this time we were silent because we wanted to respect due process. But we are concerned that, while Indonesia is developing and earning respect from the international community, domestically the Century case has not yet been resolved,” said Agus Martowardojo, chairman of the State-owned Banks Association (Himbara).

“We are sure that [Century] should be saved because its collapse could have created a systemic
threat that could have damaged our industry”.

Agus added that the government and the House should endorse a law on financial system safety nets immediately to protect Indonesia from a possible crisis. He cited the euro debt crisis as a possible threat to Indonesia’s economy.

Meanwhile, Indonesian Banks Association (Perbanas) chairman Sigit Pramono said the government should increase the performance of Bank Mutiara, the rebranded Bank Century, to minimize losses from the bailout.

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