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It wasn't a normal day in Jarkarta, thanks to the bailout of a troubled bank.
JAKARTA, Indonesia — Indonesian lawmakers voted today to recommend law enforcement agencies investigate the bailout of Bank Century, but stopped short of naming any specific officials in their censure.
The vote came a day after several members of parliament, fed up with months of political wrangling, brawled over the house chairman’s decision to delay the vote another day. Tensions boiled over again today when some lawmakers booed their colleagues and called them “banci,” a derogatory Indonesian word for transvestite, for choosing to abstain from the vote.
Meanwhile, outside the parliament building, anti-government protests turned violent for a second day. Thousands of police were overrun by demonstrators who tried to crash through barricades and enter the parliament building. Protesters through bricks at police and burned effigies of the public officials involved in the bank bailout. Later in the afternoon, police responded with tear gas and water cannons. At least five demonstrators were injured and several were arrested.
The special parliamentary committee charged with investigating the bailout failed to reach a consensus on Tuesday, offering instead two opposing recommendations for the wider parliament to vote over today.
At issue was the government decision to rescue troubled Bank Century and its subsequent management of bailout funds, which ballooned to more than $700 million, or four times the originally requested amount.
The committee’s first recommendation said the bailout was justified, while the second said there were irregularities and a formal investigation should proceed.
Foreign and domestic investors have followed the inquiry, fearing two of the country’s most-respected reformers, Finance Minister Sri Mulyani and Vice President Boediono, formerly governor of Bank Indonesia, who initially made the decision to rescue troubled Bank Century, would be forced to resign or change posts.
Although parliament voted for an investigation, the decision not to censure the pair directly represented a major political concession and indicated their jobs were safe for the time being, allowing investors to breathe easier. President Susilo Bambang Yudhoyono also made a rare public statement of support for Mulyani and Boediono on Monday, further bolstering their positions.
Furthermore, Indonesia’s parliament does not have the authority to force an investigation and the national police are likely to proceed without approval from the president.
Kevin O’Rourke, a Jakarta-based political analyst, said the contentious inquiry into the Bank Century bailout has partly derailed President Susilo Bambang Yudhoyono’s second term agenda, which began in October.
“It has posed a distraction from other matters,” he said. “But it is constructive in a sense because I think this represents the culmination of years of tension between reformers and elements of the establishment who have been resisting reforms.”
Founded by the Tantular family in 1989, Bank Century flourished during the Suharto regime and survived the 1997 Asian financial crisis. It fared less well during the most recent crisis and, coupled with the imprisonment of its most recent director, Robert Tantular, for embezzlement, was near collapse when it approached the central bank in 2008 for bailout funds.
The bank is now fully owned by the government and has been renamed Bank Mutiara.
Both Indrawati and Boediono staunchly defended their decision, saying it was necessary to prevent panic among depositors of other banks and protect the country at a time of financial instability.
The committee investigating the bailout repeatedly failed to find evidence of wrongdoing among government officials or to connect Mulyani, Boediono or the president to any irregularities.