Indonesia Lawmakers Back Criminal Probe on Bailout

Indonesian’s parliament called Wednesday for a criminal investigation into a $715 million government bank bailout that involved senior government ministers. Indonesia’s independent anti-corruption commission already has been looking into the November 2008 bailout of Bank Century, so the parliamentary vote was a largely symbolic gesture on an issue that has dominated the country’s politics in recent months.

Still, the move could undermine President Susilo Bambang Yudhoyono’s governing coalition. A parliamentary inquiry was launched last November after Indonesia’s main audit agency alleged irregularities in the bailout.

The government ministers with closest involvement are key Yudhoyono allies: Vice President Boediono, a former central bank governor who goes by a single name, and Finance Minister Sri Mulayani Indrawati. All three officials have denied any wrongdoing.

Following a parliamentary committee investigation of corruption allegations arising from the transaction, 325 legislators in the 560-seat House of Representatives voted for a criminal probe. Another 212, mostly from Yudhoyono’s Democratic Party, argued that the bailout had necessarily prevented a systemic meltdown of the country’s financial system amid the global economic crisis.

The parliamentary motion that passed said the bailout was “against the law or an abuse of power by monetary authority officials ... which could be classified as corruption crime.” National police spokesman Maj. Gen. Edward Aritonang said police would follow the recommendations and launch an investigation.

Syamsuddin Haris, a political analyst with Indonesian Science Institute, said the vote would not necessarily force Boediono and Sri Mulayani to resign, and have little impact on Yudhoyono’s Cabinet.

Greg Fealy, an Australian National University expert on Indonesia politics, said the vote did not threaten Yudhoyono’s job, but that it could cost Boediono his Cabinet post.

“It will create continuing political problems for Yudhoyono within his coalition and I don’t think he or his party have handled those at all well,” Fealy said.