Monday, November 23, 2009

Those Who Must be Responsible for The Century Case (2)

According to the Supreme Audit Agency (BPK), aside from the preliminary establishing of Century Bank as a failure that affected the system and the legal question of the Coordination Committee's status, the 'sin' of Bank Indonesia (BI), Minister of Finance, and the The Financial System Stability Committee (KSSK) is also related with the Deposit Insurance Corporation (LPS).

According to the BPK audit released by the head of BPK, Hadi Poernomo to the People's Representative Council (DPR), Monday, the LPS hasn't officially set the cost calculation to handle Century Bank as a whole.

This was influenced by the KSSK decision regarding the establishment of Century Bank as a failed bank that affected the system which didn't mention the handling cost that the LPS must spend. LPS also broke the LPS Regulation No. 3/PLPS/2008 when giving the second phase of temporary capital (PMS) as much as Rp. 2.2 trillion.

The fund disbursement wasn't discussed with the Coordinating Committee, wherein there is the LPS Commissioner Chairman. To disburse the fund, the LPS changed the LPS regulation No. 5/PLPS/2006 by using the LPS regulation No. 3/PLPS/2006 so that the KPS could fulfill the liquidity requirement of a system failure bank.

Thus, it's suspected that the LPS regulation change was a doctoring so that Century Bank could get the PMS, and not only to fulfill the standard CAR value, but also to fulfill the needed liquidity value," he said.

Based on the DPR's rejection for government regulation in-lieu-of-law (Perppu) No. 4, 2008, about financial system safety net (JPSK), the BPK concludes that the four stages to give PMS to Century Bank had no legal base. The four stages of funding were, first stage as much as Rp. 2,886.22 billion, second Rp. 1,101.00 billion, third Rp. 1,155.00 billion, and fourth Rp. 630.22 billion.

Another issue that the BPK highlighted was the fund retraction during the time Century Bank was placed under special supervision that amounted to Rp. 938.65 billion was against BI's regulation regarding monitoring follow-up and setting bank status.

Jakarta
-Actually, a bank with a 'special supervision' status is banned to transact. Century Bank finally suffered losses for compensating the deposit of its customer that was loaned or embezzled that amounted to 18 million USD and was taken from the PMS.

"Aside from that, liquifying the customer's deposit into 247 NCS (Negotiable Certificate of Deposit) with a value of Rp. 2 billion each, was done to anticipate if Century Bank closed, so that deposit was guaranteed by the LPS," he said.

Finally, Hadi mentioned that, from the handling cost for PMS that amounted to Rp. 6.7 trillion, Rp. 5.68 trillion of it was the loss of Century Bank due to illegal practices and violations of regulations, by bankers, share holders, or other related parties.

"The illegal problems that emerged were about valuable notes and transaction on Century Bank," he concluded. (Caroline Damanik/C17-09)

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