Jakarta Official Defends Bailout

JAKARTA -- Indonesian Finance Minister Sri Mulyani Indrawati said a parliamentary probe into the government's handling of a $700 million bank bailout last year is an attempt by rival politicians to unseat her because of her efforts to overhaul the country's bureaucracy.

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Indonesia's Finance Minister Sri Mulyani Indrawati, shown speaking at a seminar in Jakarta last week, in an interview defended the bailout of Bank Century last year.

Ms. Sri Mulyani and Vice President Boediono have become subjects of a parliamentary investigation into the bailout in November 2008 of Bank Century, a small Indonesian lender. As finance minister, Ms. Sri Mulyani oversaw the bailout; Mr. Boediono was central-bank governor at the time. Ms. Sri Mulyani said in an interview that failing to guarantee Bank Century's deposits at a time of huge capital outflows from emerging markets could have sparked panic among depositors of other banks. "I felt like what I did was the right thing for the country," she said.

Mr. Boediono has also defended the bailout as necessary to stop wider panic in the banking sector.

The head of the investigation, Idrus Marham, who is secretary-general of the Golkar Party, said the investigation was backed by all major political parties and wasn't targeted at Ms. Sri Mulyani. "The focus is to get data and facts" on the bailout, Mr. Marham said. He declined to comment on the specifics of the investigation, which began this month and he said will take two months to complete.

Source: The Wall Street Journal | Wed, 12/09/2009 by: TOM WRIGHT