Century bailout fund the responsibility of LPS: Mulyani

Finance Minister Sri Mulyani Indrawati said Wednesday disbursing the Rp 6.76 trillion (US$716 million) bailout fund for Bank Century was the responsibility of the Deposit Insurance Corporation (LPS).

Mulyani, the former Financial System Stability Committee (KSSK) chairwoman when the bailout was decided on, was testifying before the House of Representatives' inquiry committee into the Century bailout.

She said the KSSK was only responsible for deciding whether the bank was eligible to be bailed out.

“My responsibility was with regards to policy, in line with efforts to prevent an economic crisis in the country," she told legislators.

During a meeting on Nov. 21, 2008, the KSSK, comprising officials from Bank Indonesia, the Finance Ministry and the LPS, met to decide whether Century’s potential collapse would pose a systemic threat to the country’s banking sector.

The meeting led the KSSK to decide on the bailout.

People's Conscience Party (Hanura) legislator Akbar Faisal asked Mulyani if, as the chairwoman of the KSSK at the time, she was responsible for the bailout fund.

Mulyani dodged the question, saying only that the KSSK was responsible for the policy.

"The bailout fund fell under the LPS' watch," she said.

The minister added BI had fed the KSSK with data on Century that concluded at the time that bailing out the bank would only cost Rp 632 billion.

However, BI later issued different data about the ailing bank, resulting in the tenfold surge in the final bailout, which the LPS disbursed.

Responding to Akbar, Mulyani stressed she was responsible only for the policy.

"The KSSK's policy at that time was based on BI's data, which said Century needed Rp 632 billion," she said. (bbs)