JAKARTA, Indonesia—A former deputy governor of Indonesia's central bank was charged Thursday with allegedly taking bribes and abusing power in a bank bailout, as corruption emerges as a top issue in coming elections.
Budi Mulya denies any wrongdoing in the US$750 million bailout in 2008 of PT Bank Century, now called PT Bank Mutiara.
"I understand all the sentences, but I don't understand the substance," Mr. Mulya said in his only comment after state prosecutors finished reading the charges for trial, which began Thursday and is expected to last three to six months. His lawyer, Ruhut Pangaribuan, told reporters after the trial that Mr. Mulya rejected the charges.
The central bank and the government have defended the decision to inject $750 million into Bank Century, saying if it had closed down amid the global financial crisis depositors might have withdrawn their money from Indonesian banks, leading the country's banking system to collapse as in the aftermath of the 1997-98 Asian financial crisis.
State prosecutors charged Mr. Mulya with allegedly accepting one billion rupiah (about $86,000) from Bank Century founder Robert Tantular in September 2008, a month before the bank requested a bailout.
Mr. Tantular—who denied any wrongdoing—was sentenced to five years in prison by the South Jakarta District Court in 2009 for issuing US$200 million in fraudulent loans and misusing depositors' money. The Supreme Court in 2010 increased the sentence to nine years.
"We found a transfer of one billion rupiah to Budi Mulya," Guntur Ferry, one of the prosecutors, said after the trial Thursday.
In October of 2011, Indonesia's central bank, Bank Indonesia, said that Mr. Mulya admitted he borrowed one billion rupiah from Mr. Tantular in 2008 and he fully repaid the loan. The central bank said the money was a personal matter and had nothing to do with the decision to rescue Bank Century. Still, the central bank stripped Mr. Mulya of his duties the same month.
The bank bailout occurred during the first term of President Susilo Bambang Yudhoyono, who is term-limited for the coming elections. Indonesians will vote for a new parliament in April and a president in July.
Rival politicians in parliament have been pointing to the bank bailout as an example of corruption in Mr. Yudhoyono's government. "This is an unspeakable white-collar crime," said Fahmi Hamzah, a legislator of the Justice and Prosperous Party, an Islamic party, which is part of coalition in President Yudhoyono's government.
Mr. Yudhoyono at the time defended the decision to bail out the bank, calling it a measure that has saved the country's banking system and economy: "The decision to save Bank Century was the right one."
Vice President Boediono, who uses only one name, was governor of Bank Indonesia when the bailout was decided.
State prosecutors also charged Mr. Mulya of abusing his power, saying the bailout caused US$750 million loss to the state.
Following the bailout, the government took ownership in the bank, and in recent years it has been trying to sell the bank to investors to recoup the bailout money. But it is failing to attract serious buyers, which analysts say is likely due to the unresolved political wrangling over the decision the save the bank.