Century battle

Indonesian Finance Minister SriMulyani Indrawati defended the government's bailout last year of PT Bank Century, and said she supports a parliamentary inquiry into the rescue.
If Bank Century had been allowed to fail, others would have followed, Sri Mulyani said today at a press briefing in Jakarta.

The closing of Bank Century could have had a domino effect on 23 other banks in crisis conditions that time, she said.

Indonesia's Supreme Audit Agency (BPK) yesterday issued a report that said some of the government's liquidity injections to Bank Century had no legal basis, and unhealthy practices were exercised in handling the bailout. Lawmakers have called for a formal inquiry into the rescue.
The government initially injected IDR1 trillion to boost liquidity at Bank Century after Indonesia's Deposit Insurance Corp. seized it Nov. 21 last year, eight days after the lender failed to meet a IDR5 billion obligation on time. The bank has since received IDR6.7 trillion in funds,
prompting lawmakers to demand an inquiry into the bailout.
Sri Mulyani and Vice President Boediono, who was central bank governor at the time of the disbursement, form the core of Yudhoyono' s economic team.

Bank Indonesia said in a response to the audit that the bailout was part of the central bank's efforts to save the financial, banking and economic system in Indonesia amid the peak of the global economic crisis. Bank Indonesia deeply regrets that the audit didn't paint the whole picture of the real facts and problems, it said on its Web site yesterday.