Budi Mulya Sentenced to 10 Years` Imprisonment

Jakarta (Antara Bali) - Former deputy governor of Bank Indonesia Budi Mulya was sentenced on Wednesday to 10 years imprisonment by the anti corruption court with a fine of Rp500 million or an additional jail term of 5 months.

The court found Budi guilty of corruption in granting short term loan facility (FPJP) to scandal hit Bank Century and declaring the the scandal hit lender as a failed bank with systemic impact in 2008.

Earlier the prosecutor demanded a 17 years imprisonment with a fine of Rp800 million and a compensation of Rp1 billion or additional jail terms of 8 months and three years respectively for Budi.

Presiding judge Aviantara said Budi Mulya approved the short term loan facility not with good intention but for own benefit and to save a fund of a foundation (YKKBI) of the central bank employees deposited at Bank Century.

The foundation had Rp83 billion deposited at the bank, before it collapsed in 2008.

The foundation was one of the banks clients whose fund was returned by the bank using the short term loan facility of Rp689.39 billion.

The court also found Budi guilty of receiving a loan of Rp1 billion from Robert Tantular one of the bank owners, after approving the short term loan facility.

The court said Budi Mulya caused a loss of Rp8.5 trillion in state fund including the short term loan facility and Rp6.7 trillion in bail out fund by the state owned Deposit Insurance Agency (LPS).

The government defended the granting of the FPJP and the determination of Bank Century as a failed bank saying allowing the bank to collapse could trigger run on bank amid the global financial turbulence in 2008.

The House of Representatives, however, decided the bail out illegal, a decision that led to legal investigation by the Corruption Eradication Commission (KPK).

KPK has also questioned Vice President Boediono, who was then governor of the central bank, which facilitated the bail out fund.

The Supreme Audit Agency (BPK) said there had been malfeasance committed by related officials in granting the short term loan facility by the central bank.

The decision to declare Bank Century a failed bank potential to trigger systemic was given the reason of the government for the granting of the bail out fund.

In the report which was only wrapped up on Dec 20, 2013, BPK presented all details of alleged wrongdoings with officials as the policy makers, BPK chairman Hadi Purnomo said.

The short term loan facility was granted when Bank Century had only a capital adequacy ratio of 2.02 percent much below the minimum limit of 8 percent making the bank not entitled to the facility.

Bank Indonesia, however, changed its own regulation to allow the bank to receive the facility.

Observers said the bank was bailed out not for the sake of the bank but to recover the funds of big depositors among the government supporters ahead of the presidential election in 2009.

The bank collapsed after being robbed by its owners who drained it of cash including funds belonging to its depositors.

Some of the owners fled the country. (WDY)