Century Gate

Debates have been heightening since the first time Century Gate emerges to surface. The pros and cons of the issue circle around two main questions. First, is the bank worth saving and secondly, who was responsible for the unnecessary bailout: BI or Finance Minister (then the Chief of the Committee on Financial System Stability or KSSK)?
Special Committee has been established by the Indonesian House of Representatives to address the Century Gate. And from then on, it has conducted its duties by inviting people whom are considered playing important roles in the bailout decision. BI was involved in the initial process by promulgating that Bank Century (BC) was on the brink of collapse due to the impact of global crises that destroyed US, Japan, and several European countries steady financial institutions. The root of this crisis was the emergence of housing market bubble because of the issues of subprime mortgages to borrowers with a high risk of default. This mortgage meltdown made big financial institutions such as Lehman Brothers, Fanny Mae was falling into bankruptcy.
Indonesia is no exception. It has long become an open player for global financial market. Experts had analyzed Indonesia was also about to experiencing this crises. However, I am all for what former Vice President Jusuf Kalla steadfastly said during his investigation session with the Century Gate SC,”…the impact was not so substantial. Rupiah exchange rate was indeed depreciated, but it was only 20%. Comparing to what had happened during 1998 financial crisis when rupiah depreciated for almost 600%!! The depreciation and the decrease in stock prices composite index in 2008 was mainly triggered by foreign investors need for US dollars. Their headquarters were in bad need for dollars.”
The impact had caused panic in the regulators mind. As witnessed by Vice President Boediono..”the situation that day was so daunting. We have no options but to save all banks, including small sized one like Century. If we didn’t do that, our economy would face a contagion destroying effect from this whatsocalled systemic risk.” The Finance Minister also said..”the President direction for preventing the global financial crises was also obvious. We should help all troubled banks at all cost.”
The magnitude of the crises, however, was not so threatening. As JK said,..”if it was a financial hurricane, from 1000 houses, 500 would be destroyed. What had happened was from 1000 houses, only 1 house broke down. That was absolutely caused by the inside robbery, not because of the crises. Instead of bailing it out, I command the arrest of the owner. After that we would investigate.”
Yes, JK is correct. BC was robbed by its owner. This is pre cause. The post cause, the SC should find out the receivers of Rp6.7 trillion which had been infused by the government into the BC. Many suspected that part of the bailout fund was intentionally misused as the campaign fund for Democrat Party, the winning party on the 2009 general election.