Indonesia’s finance minister on Tuesday defended a plan to protect the purchase of special bonds issued by sovereign wealth fund Danantara from legal prosecution, saying it would allow more funds to enter the financial system.
Minister Purbaya Yudhi Sadewa’s comments came after warnings from experts that the provisions in a new broad-based financial law, passed by parliament on June 4 but only made public over the weekend, could enable buyers to launder money using the special bonds.
The law guarantees that purchases of Danantara’s controversial Patriot bonds, as well as its “merah putih” (“red and white”) bonds, will be shielded from any potential criminal or tax-related prosecution, as well as civil lawsuits.
The law also explicitly named participants in official government tax amnesty schemes as being eligible to buy the bonds.
Asked by reporters about concerns that the law could facilitate money laundering, Purbaya said: “That’s better than having the money outside. We should let the money enter the system even though there is a slight loss.”
“The money can flow into our economic system, we can use it for development,” he added.
“If you have a lot of money, put it in there immediately.”
Funds would be protected from scrutiny only if they were used to purchase Danantara bonds, Purbaya said, with other funds and assets still subject to potential investigations.
He did not provide further details.
According to the financial details released by Danantara for its recent U.S. dollar bond sale, the sovereign wealth fund has raised a total of 68.4 trillion rupiah ($3.83 billion) from three private placement sales of Patriot bonds in October and December last year and March this year.
It is not clear when Danantara plans to sell the merah putih bonds, or how many will be sold.
Danantara did not respond to a Reuters request for comment.
This month, a Danantara unit raised an upsized $1.5 billion in its debut U.S. dollar bond sale, which the fund said reflected investor confidence.
($1 = 17,860 rupiah)
Reuters
