http://www.asiasentinel.com/index.php?option=com_content&task=view&id=2326&Itemid=175
Indonesia Bailout Farce Appears Over
Written by Our Correspondent
Thursday, 04 March 2010
Rowdy lawmakers cast a late night vote in Indonesia. (Photo courtesy The
Jakarta Globe)Action 'Illegal,' House Says, But Top Officials Not Named
In a late night session that ended with lawmakers singing, dancing and
patting themselves on the back to celebrate, a majority of the Indonesian House
of Representatives on Wednesday concluded a lengthy probe into the 2008 bailout
of Bank Century by saying the action was illegal and recommending that law
enforcement agencies go after supposed corruption and banking crimes.
The result, a disappointment for President Susilo Bambang Yudhoyono that
could signal the effective end of his ruling coalition, nonetheless did not
directly name Vice President Boediono and Finance Minister Sri Mulyani
Indrawati, two of his most respected aides and the real targets of the
politically inspired probe, or call for their ouster. The pair seem to have
survived the ordeal with their positions safe.
Although there are expected to be additional actions taken to investigate
the matter on the basis of a resolution that violations and irregularities had
occurred in the bailout, it appears likely that the controversy can now trickle
away. The 325-212 vote was not viewed as a major defeat for the president.
While Boediono and Sri Mulyani were listed in an addendum to the resolution,
the recommendation that police investigate further isn't binding and the
administration is likely to ignore it or deflect it.
The downside is that three of the administration's ruling coalition
partners, including powerful Golkar and the Islamist Prosperous Justice Party
(PKS), bolted from the president's Democratic Party to call the bailout
illegal. Despite fierce lobbying to call the bailout proper, the Democrats
convinced only one of the other eight House parties to back its view that
nothing illegal had occurred in the bailout itself.
The crucial factor, though, may not be what happened in the House, but
that Yudhoyono, after months of wavering and contradictory signals, earlier
this week publicly committed himself to supporting Boediono and Sri Mulyani
over the affair, which began in October 2008 when Bank Century capsized in a
sea of fraud-created debt and several of its top officers ran for cover, some
leaving the country with hundreds of millions of dollars in bank funds and
others now sitting in prison. At the time, Boediono was central bank governor.
Sri Mulyani chaired the committee that approved the bailout. The two officials
have said they allowed the $700 million bailout amid fears that a collapse of
Bank Century threatened the banking sector at the height of the global
financial crisis. They say the crimes that occurred had nothing to do with the
bailout.
The inquiry into the affair has paralyzed Indonesian politics for months
and tarnished Yudhoyono's reputation both as a decisive leader and as a
reformer. He has proven unable to keep his fractious ruling coalition in line,
despite attempts by some lawmakers during the probe to say that even he took
bailout money for his political party. That claim the committee quickly backed
away from since they had no evidence.
His appearance of waffling at times on the fate of the two officials,
along with his late and indecisive support in December for the embattled
Corruption Eradication Commission when two top officials of that organization
were arrested by corrupt police, has also hurt him both within and outside the
country.
The fact that both Boediono and Sri Mulyani will likely remain in
government should be a welcome signal to international investors.
The House grandstanding on Wednesday bordered on farce at times and ended
two days of plenary antics over the final conclusion of the probe. During the
lengthy televised investigation, which carried no legal weight, it was clear
that Golkar wanted Sri Mulyani's scalp at the very least. Much of the rest of
the hearings seemed an attempt by individual lawmakers to raise their political
profiles in front of the cameras.
Government official say privately they believe the entire affair was
manipulated by Golkar Chairman and tycoon Aburizal Bakrie to punish Sri Mulyani
for going after his companies over tax arrears and a number of regulatory
violations. Said one observer in Jakarta, the final vote means that Sri Mulyani
faced down Bakrie and won this round.
"The vote was a joke in the first place," said a long-time Jakarta-based
political observer. "It's not legally binding and it shows the entire process
was political."
A spokesman for the vice president told reporters, "The House political
conclusion is not a legal conclusion. It is only an investigation in front of
the TV, which so far has not provided proof. The truth of the House version is
only the political truth, not the legal [truth]."
Outside the House, two days of small but unruly demonstrations
accompanied the vote. Police fired tear gas and water cannons in attempts to
disband the protesters after they began throwing rocks and other projectiles.
Thirteen people were reported injured. But as an added indication of the level
of political theatre, protesters have readily acknowledged to reporters that
they were paid about $3 a head and given free meals to attend the rallies.
The next step will be to see if Yudhoyono makes good on Democratic Party
calls to boot the disloyal coalition members out of his cabinet. So far he has
taken no action. Most observers believe he could have stopped the investigation
in its tracks before it was launched, at a time when he was at the height of
his political power as a result of his strong victory in the July national
presidential election.
If the affair is over and the two remain in place - there is a slight
chance lawmakers could seek an impeachment resolution against Boediono -
reformers are waiting to see if Yudhoyono will defang the errant coalition
members. The betting is that he won't. Bakrie may simply be too powerful and
too rich for Yudhoyono to battle head on.
The contest between Bakrie and Sri Mulyani seems certain to continue as
the public side of the affair simmers down. Neither side appears likely to seek
an accommodation with the other. If the government wants revenge against
Bakrie, one official said, one avenue open is to step up regulatory pressure on
his companies, which are heavily dependent on government contracts and also
complex financial maneuvers that are subject to official oversight by Sri
Mulyani's ministry.
The trench warfare may be on the way.
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