Centurygate scandal, Boediono & Mulyani under pressure, SBY sees dire threats to his good self.
The long troubled PT Bank Century (now PT Bank Mutiara), once the country's 13th largest bank, in late October 2008 defaulted on several large loan payments and was declared insolvent by the Financial Sector Stability Committee (Komite Stabilitas Sektor Keuangan (KSSK)), which was led by Finance Minister Sri Mulyani and included then BI Governor now vice president Boediono. It had been under supervision by Bank Indonesia (BI) since 2005.
Boediono's declaration at the time that the bank's financial weakness now
posed a systemic threat to the banking system
was the key factor in Bank Century thereafter being taken over by the Deposit Insurance Agency (LPS) and a series of massive injections of state funds into it proceeding, totalling 6.7 trillion rupiah or almost $700 million, over a period of nine months. Minister Sri Mulyani concurred with the BI Governor's judgement.
As the parliament became aware of the scale of the bailout in mid 2009 its Commission XI for financial affairs held hearings with Mulyani and BI senior deputy governor Darmin Nasution, and soon ordered the Supreme Audit Agency (Badan Pemeriksa Keuangan (BPK)) to launch an investigation.
The scandal that has become known as "Centurygate" revolves around not only the massive drain on state funds involved, but questions of whether some depositors (such as tycoon Boedi Sampoerna) had preferential treatment or access to their funds after the bailout money had been injected, and whether some of the money was diverted and embezzled.
Presently a parliamentary enquiry named "Panitia Khusus Centurygate" (Pansus Centurygate) is underway, and much politically inspired rhetoric has emanated from it, with some calling for the dismissal of Mulyani and vice-president Boediono over their involvement in the case, and even their impeachment.
Meanwhile President Susilo Bambang Yudhoyono (SBY), who retrospectively approves of the bailout as a sound financial decision, has been accused of being weak in handling the fallout from the affair and is becoming increasingly 'testy' and bad-tempered about the matter. A planned mass demonstration on 9th December to mark International Anti-Corruption Day has had the president vocally worrying that there are those who wish to topple him, and warning against any repeat of the May 1998 riots in Jakarta.