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Hearing over Indonesian bank bailout erupts into chaos

A meeting of Indonesia’s parliament to debate the results of an investigation into the financial bailout of a small bank during the height of the global financial crisis erupted into chaos Tuesday while police outside the building dispersed several thousand protesters with tear gas and water cannons.

Lawmakers debated Tuesday whether or not a criminal investigation by law enforcement agencies should be launched into Finance Minister Sri Mulyani and Vice President Boediono, formerly the governor of Bank Indonesia, for their decision to approve the bailout of Bank Century and their subsequent management of the bailout funds, which ballooned to $700 million, or four times the original amount requested.

The pair is credited with much of the country’s financial reform over the last few years, putting them at odds with country’s more established business executives and politicians.

Leading the demands for a criminal investigation has been the multi-billionaire businessman Aburizal Bakrie, who is also chairman of the Golkar Party. Mulyani’s reforms have repeatedly hurt Bakrie-controlled companies.

Most recently, Mulyani ordered an investigation into possible tax evasion by Kaltim Prima Coal, whose parent company is part-owned by the Bakrie Group. The government banned an official at the company from international travel until the investigation is complete.

Mulyani also refused to bailout Bakrie-related companies and opposed the suspension of trading on the Jakarta Stock Exchange in 2008 during a massive sell-off of Bakrie stock. Bakrie companies lost more than 40 percent of their value during the sell-off.

“Certainly it is not easy for him,” Mulyani said an interview with GlobalPost last year, referring to how her efforts at reform have affected Bakrie, who at the time was a fellow minister. “He complains. But in a way he also understands that this is a time of transition and he respects the fact that the country needs people like me.”

Bakrie’s “understanding” appears to have waned as his Golkar party, together with several opposition parties, are hoping a criminal investigation will take Mulyani out of her job.

Parliament had scheduled a vote on Wednesday. But several lawmakers demanded the vote take place immediately on Tuesday, in an apparent attempt to prevent any more lobbying by the president. When the chairman refused, lawmakers rushed the podium, reached for his gavel and called for the chairman’s dismissal.

One opposition lawmaker flung a water bottle at the chairman and another was nearly punched. Security guards were forced hold back irate lawmakers to break up the scuffle. The chairman then adjourned the meeting until Wednesday.

Both Mulyani and Boediono have said the bailout was necessary to avoid a larger banking collapse at time when the world’s economies were reeling from the global crisis.

Indonesia emerged from the global financial crisis almost unscathed and has posted positive growth rates since the financial crisis struck in 2008.

Protests outside the parliament building on Tuesday also turned violent as demonstrators tried to close off the street using large coils of barbed wire. Some protesters then started throwing bricks at police, who responded with tear gas and water cannons.

http://www.globalpost.com/notebook/indonesia/100302/hearing-over-indonesian-bank-bailout-erupts-chaos