Articles

Dangerous parallels between the Bibit-Chandra and Bank Century cases – and important differences

The Jakarta Post
29 November 2009

 

Dangerous parallels between the Bibit-Chandra and Bank Century cases – 
and important differences
by Wimar Witoelar
The first BC case (Bibit-Chandra) is now at the beginning of the end, and now the second BC case (Bank Century) is at the end of the beginning.  There are dangerous parallels between the two BC cases. In both cases, legitimate concerns about the  public interest have sparked popular opinion.  Public opinion is flexing its muscles  with  the effective use of social media on the internet.  Facebook and blogs and instant messaging tools have given people access to public debate on a scale never before experienced.  State-of-the-art  television coverage presents  serious issues as reality shows that arouse emotions exceeding  understanding of the technicalities.  Television and internet media help to educate and empower the public and present the main parallel between the two cases. But there are important differences.
The Bibit-Chandra case is largely about moral issues  of sincerity and duty versus greed and conspiracy. The Bank Century case is not that simple. It is very technical involving banking  and economic crisis management.  Yet public  euphoria is carrying over energy from the Bibit-Chandra case to the Bank Century Case.  Following the 1.4 million facebook votes in support of Bibit-Chandra, there is a motion of no confidence against the President.  While it is too serious, it would be dangerous to ignore the parallel.  People power is good, but not if it is driven by the greed of politicians and big money from business people who need to ensure their privileges.  The SBY coalition is broad but not deep. Many ostensible SBY supporters  stand to gain from the removal of the two icons of finance, even at the risk of destabilizing the government.
The Bibit-Chandra case is at the beginning at the end. The presidential speech of November 16  put forward  mixed signals., but actually it was a clear  pronouncement. It was presidential in language but poor in timing, too little too late. It is a “do it yourself” solution which demanded the Police Chief and the  Attorney General to  follow up. The cabinet has formed a task force to clean up the justice system. The public is invited to be more confident in demanding  broad reforms.
The Bank Century case is at the end of the beginning, an issue which lay dormant for a year until the political landscape changed.   Bank Century fell because of fraud perpetrated by its owners and accomplices who bled its treasury to death. The government has dealt with this  part of the crisis by prosecuting the criminals, recovering the stolen money  and taking control of the bank. The choice was then whether to let Bank Century disappear or to salvage the remains. 
Imagine a house run by owners living a life of lust and sin. Suddenly they  went wild, took out  valuables and left the house burning. Authorities had to move fast and decide what to do with the house. They could let it burn to ashes, or they could put out the fire and rescue the house. Had the house stood alone on empty land, it could be left to burn. But the house is in a densely populated area. The fire could easily spread to houses next door to eventually burn out the whole area. Fire spreads easily in some conditions, and that was a time of an extremely volatile condition. 
At the height of the economic crisis in November 2008, the Indonesian treasury faced a dilemma. If they let Bank Century fold, the domino effect could threaten to lead other financial institutions into bankruptcy and trigger a market crisis of confidence.  Hank Paulson who was then US Treasury Secretary faced the same dilemma and chose to let Lehman Brothers fall. That was followed by a deluge of financial failures which left the US economy reeling, sending an urgent message to the rest of the world. Neighboring countries like Singapore, Malaysia, and Australia immediately imposed a blanket guarantee on  their banks. Indonesian businessmen implored our government to do the same, but the cost would be prohibitive. Instead, Indonesia chose to rescue banks that are deemed to pose systemic risk on the banking system. Bank Century was brought to the Committee for Stabilization of the Financial Sector (KSSK) which decreed a takeover, entrusting it  to the Deposit Insurance Agency (LPS).  Depositors money was safeguarded as Rap 4.3 trillion in deposits were rescued from the bank. This scenario represented  the role of the Department of Finance, center stage but brief. The drama then follows.
Politicians and business people who supported the Bank Century bailout in November 2008 are protesting it now in November 2009. After the elections sidelined some political parties and politicians, rumors started to be spread that the bank’s money was withdrawn by  depositorsclose to SBY. There were allegations that some law enforcement officers lent a hand in persuading the bank to issue the money. How much was withdrawn by whom, nobody knows. It is certainly useful to investigate these cash flows, and the legality of the ‘hak angket’ by the DPR is sound.  But the spirit remains to be watched vigilantly as many in the anti-government cabal might  have questionable motives. People  who were thwarted by treasury Minister Sri Mulyani in their attempts to abuse the stock market, tax laws, and illegal acquisitions would breathe with relief if she were replaced by  a Treasury Minister more tolerant of their schemes. Government officials who were removed in Sri Mulyani’s lauded reform measures have reappeared  in new powerful positions. The State Audit Agency (BPK) stated that the government has incurred losses in the Bank Century case, when there are clearly none.  In fact, it would have been more expensive to let the bank fail as  the government would still have to pay Rp  5.5 T, plus the cost of other banks failing. The incremental cost of the bailout is “only” Rp1.2 T, an amount well within the possibility of recovery upon divestation. 
As for motives, experts and reporters can readily testify to the integrity of Sri Mulyani and Boediono. The newspaper  “Emerging Markets”  awarded the title of Best Finance Minister in Asia upon Sri Mulyani. “VIVANews” reported that Sri Mulyani was recorded having solid performance in the last five years. She has been awarded the best Asia's finance minister for several times. "Sri Mulyani is not only well-known among the international community. Everyone in the banking and monetary circle respects the woman," adding that she was reappointed  as Finance Minister based on progress achieved in areas like economic growth, investor trust, and ratings in Indonesia, and on the opinions of her held by foreign investors. 
But  the dangerous parallel to the use of people power in the other BC case is that voices of reason could be drowned out by the cacophony of greed and political motives. It is a time to be vigilant, as the damage will not be limited to the two government officials having the highest public trust, but to the President himself and the stability of our economics.

 

by Wimar Witoelar

 

 

The first BC case (Bibit-Chandra) is now at the beginning of the end, and now the second BC case (Bank Century) is at the end of the beginning.  There are dangerous parallels between the two BC cases. In both cases, legitimate concerns about the  public interest have sparked popular opinion.  Public opinion is flexing its muscles  with  the effective use of social media on the internet.  Facebook and blogs and instant messaging tools have given people access to public debate on a scale never before experienced.  State-of-the-art  television coverage presents  serious issues as reality shows that arouse emotions exceeding  understanding of the technicalities.  Television and internet media help to educate and empower the public and present the main parallel between the two cases. But there are important differences.

The Bibit-Chandra case is largely about moral issues  of sincerity and duty versus greed and conspiracy. The Bank Century case is not that simple. It is very technical involving banking  and economic crisis management.  Yet public  euphoria is carrying over energy from the Bibit-Chandra case to the Bank Century Case.  Following the 1.4 million facebook votes in support of Bibit-Chandra, there is a motion of no confidence against the President.  While it is too serious, it would be dangerous to ignore the parallel.  People power is good, but not if it is driven by the greed of politicians and big money from business people who need to ensure their privileges.  The SBY coalition is broad but not deep. Many ostensible SBY supporters  stand to gain from the removal of the two icons of finance, even at the risk of destabilizing the government.

The Bibit-Chandra case is at the beginning at the end. The presidential speech of November 16  put forward  mixed signals., but actually it was a clear  pronouncement. It was presidential in language but poor in timing, too little too late. It is a “do it yourself” solution which demanded the Police Chief and the  Attorney General to  follow up. The cabinet has formed a task force to clean up the justice system. The public is invited to be more confident in demanding  broad reforms.

The Bank Century case is at the end of the beginning, an issue which lay dormant for a year until the political landscape changed.   Bank Century fell because of fraud perpetrated by its owners and accomplices who bled its treasury to death. The government has dealt with this  part of the crisis by prosecuting the criminals, recovering the stolen money  and taking control of the bank. The choice was then whether to let Bank Century disappear or to salvage the remains. 

Imagine a house run by owners living a life of lust and sin. Suddenly they  went wild, took out  valuables and left the house burning. Authorities had to move fast and decide what to do with the house. They could let it burn to ashes, or they could put out the fire and rescue the house. Had the house stood alone on empty land, it could be left to burn. But the house is in a densely populated area. The fire could easily spread to houses next door to eventually burn out the whole area. Fire spreads easily in some conditions, and that was a time of an extremely volatile condition. 

At the height of the economic crisis in November 2008, the Indonesian treasury faced a dilemma. If they let Bank Century fold, the domino effect could threaten to lead other financial institutions into bankruptcy and trigger a market crisis of confidence.  Hank Paulson who was then US Treasury Secretary faced the same dilemma and chose to let Lehman Brothers fall. That was followed by a deluge of financial failures which left the US economy reeling, sending an urgent message to the rest of the world. Neighboring countries like Singapore, Malaysia, and Australia immediately imposed a blanket guarantee on  their banks. Indonesian businessmen implored our government to do the same, but the cost would be prohibitive. Instead, Indonesia chose to rescue banks that are deemed to pose systemic risk on the banking system. Bank Century was brought to the Committee for Stabilization of the Financial Sector (KSSK) which decreed a takeover, entrusting it  to the Deposit Insurance Agency (LPS).  Depositors money was safeguarded as Rap 4.3 trillion in deposits were rescued from the bank. This scenario represented  the role of the Department of Finance, center stage but brief. The drama then follows.

Politicians and business people who supported the Bank Century bailout in November 2008 are protesting it now in November 2009. After the elections sidelined some political parties and politicians, rumors started to be spread that the bank’s money was withdrawn by  depositorsclose to SBY. There were allegations that some law enforcement officers lent a hand in persuading the bank to issue the money. How much was withdrawn by whom, nobody knows. It is certainly useful to investigate these cash flows, and the legality of the ‘hak angket’ by the DPR is sound.  But the spirit remains to be watched vigilantly as many in the anti-government cabal might  have questionable motives. People  who were thwarted by treasury Minister Sri Mulyani in their attempts to abuse the stock market, tax laws, and illegal acquisitions would breathe with relief if she were replaced by  a Treasury Minister more tolerant of their schemes. Government officials who were removed in Sri Mulyani’s lauded reform measures have reappeared  in new powerful positions. The State Audit Agency (BPK) stated that the government has incurred losses in the Bank Century case, when there are clearly none.  In fact, it would have been more expensive to let the bank fail as  the government would still have to pay Rp  5.5 T, plus the cost of other banks failing. The incremental cost of the bailout is “only” Rp1.2 T, an amount well within the possibility of recovery upon divestation. 

As for motives, experts and reporters can readily testify to the integrity of Sri Mulyani and Boediono. The newspaper  “Emerging Markets”  awarded the title of Best Finance Minister in Asia upon Sri Mulyani. “VIVANews” reported that Sri Mulyani was recorded having solid performance in the last five years. She has been awarded the best Asia's finance minister for several times. "Sri Mulyani is not only well-known among the international community. Everyone in the banking and monetary circle respects the woman," adding that she was reappointed  as Finance Minister based on progress achieved in areas like economic growth, investor trust, and ratings in Indonesia, and on the opinions of her held by foreign investors. 

But  the dangerous parallel to the use of people power in the other BC case is that voices of reason could be drowned out by the cacophony of greed and political motives. It is a time to be vigilant, as the damage will not be limited to the two government officials having the highest public trust, but to the President himself and the stability of our economics.

 

 

 

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17 Comments:

  1. From Felix on 30 November 2009 10:08:26 WIB
    Pak WW, waktu masa pemerintahan SBY-JK, pemerintahan stabil2 dan aman2 saja, tidak ada goro2 seperti ini. Tapi begitu SBY-Boediono, banyak hal2 \"aneh\" yg muncul. Ini saya rasa karena waktu jaman SBY-JK \'setan\' nya ada di dalam pemerintahan, sekarang \'setan\' nya sudah keluar semua dan menggangu jalan nya pemerintahan.

    Yg lebih meng khawatirkan saya adalah para LSM, kok sepertinya gerakan mereka tidak lagi murni tapi sudah punya political motives, apa mereka dgn sadar menjadi bagian dari grand design nya si \'setan\', atau mereka sebenarnya hanya di tunggangi tanpa sadar.
  2. From Fajar Prasetyo on 30 November 2009 13:41:50 WIB
    @ Felix: apa maksud anda "setan"nya sudah keluar dari pemerintahan sekarang..??
    apa anda menuduh JK adalah pengganggu jalannya pemerintahan sekarang..??
  3. From ariee on 30 November 2009 16:46:38 WIB
    my thought can only confirm that the way the matter is handled is againts the spirit of democracy where secrecy is a sin. if we are confiden twith our resources i will not count on the thought that there,s no other better individuals than the two icons, it,s like saying no one stand better than soeharto in the old days.
  4. From djaka on 30 November 2009 18:16:34 WIB
    @Felix: kenapa lsm spt punya political motives? Emang punya :) Mereka melihat Sri Mulyani dan Boediono adalah simbol kapitalisme. Coba perhatikan posisi LSM-LSM yang berwatak sosialis.
  5. From Felix on 01 December 2009 01:26:46 WIB
    @Fajar,

    waktu saya nulis itu sih maksud saya dgn \"setan\" bukan cuma pak JK, ada juga yg terkait dgn urusan lumpur. Tapi memang saya berpendapat bahwa para \"penganggu\" jalan nya pemerintahan sekarang punya benang merah yg mengarah kepada JK. Drajad Wibowo, Kwik Kian Gie, Efendi Gazali, Syamsudin Harris, Ichsanoodin Noorsy dan kemarin baru mulai keluar suara nya di pertemuan di hotel mulia Aksa Makmud ! Besan dari ujung benang merah... coincident ? I don\'t think so...
  6. From Felix on 01 December 2009 01:29:00 WIB
    @djaka,

    Ooo.. begitu ya... kata nya namanya ICW.. Indonesian Corruption Watch, ternyata harus nya Indonesia Neo liberalism Watch toh.. jadi mereka tidak murni menganyang korupsi tapi mau merubah arah negara...
  7. From wimar on 01 December 2009 05:15:06 WIB
    @ Felix: excellent comments. I have nothing to say except that I agree to everything you say.
  8. From sen on 01 December 2009 09:05:49 WIB
    Sebetulnya Century bisa selesai dengan cepat.

    Caranya : kalau tidak ada penyelewengan dana, jual saja bank Mutiara dan duitnya balik ke LPS. Harusnya dengan laba yang diraih sejak setahun yang lalu(kalau benar ada laba sesuai dengan laporan keuangan), bank Mutiara yang sekarang bisa dijual dengan harga paling sedikit 6.7 triliun.

    Tidak perlu berdebat masa lalu yang susah untuk dibuktikan.

  9. From Andy on 01 December 2009 12:58:35 WIB
    The natural side-effect of The Bank Century Sinetron is the slight improvement of Indosiar's finance. Here's why:

    During the first season of BC Sinetron, my eyes were glued to TV One and Metro TV, listening to the exchanges from both sides. Other channels can only dream of my precious viewership.

    Now, during the BC:Season 2, I turned to the same channels and meeting my eyes were Rizal Ramli, Kwik Kian Gie, Ichsanuddin Noorsy offering their "expert" opinion. Being an educated and well-read person, I obviously prefer the more educational program available on that time slot which is Indosiar's Take Me Out Indonesia. Go Indosiar!
  10. From Riffa on 01 December 2009 21:28:05 WIB
    reviewed complete the story more complicated to understand for me @_@;


    http://riffajp4inspiration.wordpress.com/
  11. From Felix on 02 December 2009 01:39:11 WIB
    @Pak WW, thank you...

    @Andy, Excellent joke ! how true it is... take me out is certainly more intelligent, than the sayings of those failed economist clowns...
  12. From FH on 02 December 2009 07:41:06 WIB
    Mbak Ani dan Pak Boed mungkin benar tapi Beliau2 sangat mungkin dimanfaatkan para politikus. Ini yang rasanya perlu kita cermati dan bedakan. Hal lain aliran dana ke parpol sebetulnya sudah jamak dilakukan di Indonesia walaupun jarang terendus/terangkat ke Media seperti halnya Markus yang tidak terekspos sebelum kasus B-C. Alangkah sedih SBY bilang kalau 100 % adanya aliran ke parpol tidak benar, sebetulnya lebih bijak kalau disampaikan akan dilakukan pengecekan untuk diuji kebenarannya shg terbukti mana yang benar2 salah/benar (walau rasanya amat2 jauh). Kok seperti ikut2an mencatut info nggak valid dari anak buah seperti yang diuraikan Kapolri waktu lalu. Ayolah kita dorong SBY, untuk mengikuti hati nurani dan suara orang biasa shg bisa perlahan bisa membongkar dan membenahi entah itu Markus, calo talangan, calo passport, calo SIM, calo KTP, dan lain2..


    Salam,
    Yang masih berharapMUL SBY memungkinkan menjadi pintu perbaikan kondisi sekarang....
  13. From Ludjana on 02 December 2009 18:34:07 WIB
    We might get fed up

    We, who voted for SBY two times. By hindsight, I think that we (at least I) have voted for SBY by default. Because, we think that no one else of the other candidates would be good for President of Indonesia.
    SBY is at least democratic, relatively clean, and has the capacity to be leader. Him being a general of the army.

    We were wrong again and again..
    Again and again he has proven that he avoided responsibility, hiding behind his wish to govern according to existing laws.
    First in the Bibit-Chandra case: When he avoided to act based on the finding of Team 8 (which consists of well known public figures with doubtless capability and integrity) we were very disappointed and annoyed. Why did not he act as a leader at last, instead of leaving it open ? It was obvious that he accepted the finding of the team. Later, when the Police and the AGO acted on it, we were willing to go along with SBY’s “strategy” of escaping responsibility. We forgot, that the head of Police and the Attorney General had to be punish for letting innocent people being victimized.

    Now again.
    How can he let Boediono and Sri Mulyani Indrawati be the victim of a witch hunt ? Whereas everyone knows that they are two of top functionaries of our country with the highest capability and integrity .
    At least he should voice his conviction that he trusts them and that they have been acting on good faith (we leave in the middle, whether the bailout of the Century Bank was a good decision or not. (I believe it was).
    He was the one who choose the Vice President and appointed Sri Mulyani Indarwati as Minister of finance. So an attack on them should be considered an attack on him.

    By many of his actions (or non actions) up to know he has caused unnecessary conflicts and enmities between our people. Especially his good friends have been sacrificed all the times. While he spared the feelings of his rivals and his enemies.

    There is one possibility (which I disregarded, because I thought the he was GOOD) and thai is that he (or his “gangs”) have been involved in the bailout. By, perhaps, receiving illegal funds.

    I can dwell longer on it. Suffice me to say, at present, that I get frustrated when I face those people who voted against him, because SBY supply them with a lot of material to make him look bad, very, very bad.

    Should I regret that I voted for him (2 times )?
    I do not think that someone else would make a better President
    Will the change for the better ?

    It is like expecting a miracle to happen.
  14. From wimar on 02 December 2009 21:44:42 WIB
    there's a lot of truth in what @Ludjana said, couldn't have said it better myself.
  15. From david on 02 December 2009 23:41:09 WIB
    @Ludjana

    your english is so fine you might have hear this:
    Insanity is doing the same thing and expecting different results!!


  16. From Hamim on 03 December 2009 06:21:07 WIB
    Ini judul sebuah berita di Detik.com tg 3 Desember 2009: “Ical: SBY-Boediono Simbol Negara, Harus Diselamatkan”


    Dengan ini cukup jelas siapa yang paling ingin menjatuhkan Sri Mulyani: Aburizal Bakrie.


    Malahan barangkali dia sponsor finansiil utama dari projek:”Pecat Sri Mulyani” Tujuannya ? Dendam: karena penolakan bailout perusahaannya oleh SMI.

    Dan juga agar bebas lagi "berusahanya", dan dalam hal ini banyak sekali yang menginginkan turunnya Sri Mulyani Indrawati, termasuk Jusuf Kalla yang untuk pertama kali mencetuskan gagasan untuk menghidupkan kembali peristiwa Bank Century.


    SBY sih akan diselamatkan



    Kita lihat saja
  17. From jaka on 03 December 2009 23:52:36 WIB
    Hamim@: Sayah setuju sekali dengan pendapat anda. Kericuhan politik yg dibungkus kasus ekonomi ini, kemungkinan besar memang bermotifkan balas dendam.

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