VP Defends Controversial Bailout to Century Bank

Jakarta (Antara) - Vice President Boediono has defended his decision to provide a bailout fund to Century Bank in 2008 when he was Governor of Bank Indonesia, referring to it as necessary to safeguard Indonesia's economy. During a Saturday press conference here, the vice president made his comments after being questioned as a witness by the Corruption Eradication Commission (KPK) for seven hours earlier in the day. The bailout to Century Bank has become controversial, as the fund quickly increased from the initial amount set by Bank Indonesia. "The bailout fund was necessary to save our economy from a crisis. A failure in even the smallest financial institution, at the time, might have brought a negative domino effect in this country," he said. Bank Century received a bailout of Rp6.7 trillion during the financial crisis of 2008, despite failing to fulfill the requirements for a bailout. According to the State Audit Board (BPK), Bank Indonesia modified its own regulations to allow the bank to receive the loan. The anti-graft body has detained former Bank Indonesia deputy governor Budi Mulya for his alleged role in handling the Bank Century case. Mulya was detained for 20 days last Friday as a suspect in connection with extending a short-term funding loan to Bank Century and declaring it a failed bank. Besides Budi Mulya, another BI executive considered accountable for extending the loan is Siti Fajriah, but the investigation has been hampered because she is too ill to participate in a court trial. As to the swelling of the fund in the Century bailout, Vice President Boediono said the issue is under the jurisdiction of the Insurance Deposit Agency (LPS) and Bank Supervisory Directorate in Bank Indonesia. (*)