New Bank Indonesia Deputy to Lead Reform

The appointment of the 55-year-old economist Destry Damayanti as senior deputy governor of Bank Indonesia, the country’s central bank, is believed to be a signal that the administration of President Joko Widodo is serious about cleaning up the country’s corruption-ridden financial system.

Damayanti, whose name was proposed by the president in April, brings a distinguished resume to the central bank, headed by Governor Perry Warjiyo, a career bank official, and could well outshine him at the bank, sources say. Before being elected to the central bank post, she was appointed by Jokowi, as the president is universally known, as a commissioner of the Insurance Deposit Corporation. Before serving on the board, she was chief economist at Bank Madiri Tbk, the country’s largest bank, which is government-owned.

Her appointment raises hopes that a proposal will go forward by the central bank to implement comprehensive new IT software that would allow the bank to track virtually every transaction made electronically in the country in real-time. According to sources in Jakarta, the implementation of the software has been stalled for months by banking officials, making it problematical whether it will ever be put into place. The vested interests against reform are enormous. Singapore is said to be the home of as much as US$360 billion that is believed to have been parked, representing 40 percent of the country’s banking assets.

Damiyanti’s remit, according to a government release, is to deepen the financial sector not only to support economic stability, but also to support economic development financing from the limited sources of government and domestic funds. She is charged with developing a payment system that is smooth, safe, efficient and inclusive, related to the rapid development of the digital economy.

She is also expected to develop the sharia economy and finance, which may be problematical. Some sources say the shariah banks in Indonesia are throbbing with loans that are unlikely to be paid back.

Significantly, Damayanti was also the chairwoman of the selection committee for the fearsome Corruption Eradication Commission in 2015. The KPK, as the commission is known, is the country’s most incorruptible law enforcement institution. It has resulted in the jailing of dozens of politicians including congressmen, regional councilmen, judges, businessmen, and others. According to a report at the end of last year, it named 229 individuals as suspects in 2018, its highest total since its inception in 2003.

While Damiyanti had no operational role at the KPK, her identification with the organization is a clear mark in her favor.

The central bank has been the target of corruption charges going back to 2008, when Burhanuddin Abdullah, the governor, was convicted of bribing parliamentarians and jailed. Three of his deputies were also jailed. Later, Budi Mulya, the deputy bank governor, was also arrested and jailed in the notorious Bank Century case, in which hundreds of millions of dollars were siphoned off and spirited overseas.

Miranda Gultom, also a former senior deputy governor, was arrested in June of 2012 and sentenced to three years in prison for bribing lawmakers to give her the job at the central bank. She was released after serving her full term. It was announced in November of 2018 that Boediono, the highly-respected central bank governor who also served as the country’s vice president under President Susilo Bambang Yudhoyono, is also under investigation in connection with the Bank Century case by the KPK.

The Damiyanti appointment dovetails with a May 2019 announcement that Indonesia and Switzerland had signed a mutual legal assistance agreement to seek to track money laundered out of the country and parked in Swiss banks. The agreement appears to have been formalized as long ago as February 4 until after Jokowi’s reelection in the April 178 general election over former Special Forces general Prabowo Subianto, possibly to avoid upsetting the Indonesian elites who have laundered billions of dollars out of the country. ”The Indonesians want to go after the proceeds of past crimes,” a Jakarta source told Asia Sentinel at the time. “This agreement is quite something.” It is designed to aid the government in tracking wealth, determining the amount of stolen money and repatriating it.

For decades, Indonesia has been in a halfhearted campaign to repatriate its money, much of it believed stolen by the Suharto family, whose patriarch, the late strongman, died in 2008 after leaving office in 1998 following 31 years in power. There have been other notable thefts, including events following the failure of Indonesia’s Bank Century in 2008, with an estimated US$1.5 billion believed to have been stolen by the bank’s then-president, Robert Tantular. Much of that money is believed to have found its way into Swiss banks.

According to the Tax Justice Network, at least $331 billion remains overseas. The Damiyanti appointment, along with the agreement with the Swiss government is an important signal that times may be changing.