Bank Istimarat, Bank Pelita seek out-of-court deal<\/p>\n
JAKARTA (JP): The Central Jakarta Commercial Court has asked
\nthe Indonesian Bank Restructuring Agency (IBRA) and owners of the
\nnow defunct Bank Istimarat and Bank Pelita to seek an out-of-
\ncourt settlement over the agency's charge that the two banks had
\nmisused the government's emergency loan worth over Rp 3 trillion
\n(US$340 million).<\/p>\n
In the first hearing of the case on Tuesday, chief judge
\nSubardi told IBRA and the owners of the two closed banks to seek
\na \"win-win\" solution rather than proceed with the legal battle.<\/p>\n
Warih Sadono and Slamet Riyadi, IBRA's legal advisors said
\nthey agreed with the court's proposal as long as the deal
\nsatisfies their client.<\/p>\n
\"We will see what's best for the two sides (IBRA and Bank
\nIstimarat) but what is clear is that the bank must pay,\" Warih
\ntold reporters following the hearing.<\/p>\n
According to IBRA, Bank Istimarat had misused the government's
\nemergency loan, or more popularly called liquidity support, worth
\nRp 596 billion (about US$79.5 million).<\/p>\n
IBRA alleged Bank Pelita of misusing some Rp 2.6 trillion of
\nthe liquidity support injected into the bank to keep it afloat
\nduring the monetary crisis.<\/p>\n
The government, through Bank Indonesia (BI), channeled some Rp
\n144.5 trillion in emergency liquidity support to 48 banks between
\n1998 and 1999 in a bid to safe them from collapsing amid massive
\nbank runs.<\/p>\n
The public's confidence in the banking industry dropped to its
\nlowest point following the government's decision, during the
\neconomic crisis in late 1997, to close down 16 private banks.<\/p>\n
Some of the banks which received BI's liquidity support had to
\nbe closed down, while others were nationalized and placed under
\nIBRA.<\/p>\n
According to the findings of the Supreme Audit Agency (BPK),
\naround Rp 138.4 trillion (95 percent) of the emergency loans were
\neither misused or channeled in violation of banking regulations.<\/p>\n
Banks were supposed to use the liquidity support to settle
\ntheir obligation. But BPK said the banks used the emergency loans
\nfor other purposes, such as currency speculation, lending to
\naffiliated business groups and repaying subordinated loans.<\/p>\n
The Rp 144.5 trillion in liquidity support has now become the
\ngovernment's debt to the central bank, for which the government
\nplanned to issue bonds to repay the debt.<\/p>\n
Bank Pelita and Bank Istimarat were among the banks the
\ngovernment suspected of having misused BI's liquidity funds.<\/p>\n
IBRA took the two banks' board of directors and owners
\nbusiness tycoon Hashim Djojohadikusumo and his father, economist
\nSumitro Djojohadikusumo to court for their failure to repay the
\nliquidity support given to the banks.<\/p>\n
The agency demanded Hashim and his father Sumitro be held in
\ncustody if they failed to pay their debts.<\/p>\n
Should the court grant IBRA's request, Hashim and his father
\nmight be among the first to fall victim to the Supreme Court's
\nregulation No.1\/2000.<\/p>\n
The regulation stipulates that uncooperative debtors with
\ndebts of at least Rp 1 billion, could face imprisonment of
\nbetween six months and four years.<\/p>\n
However, the two banks' legal advisor Hotman Paris Hutapea
\nsaid IBRA had addressed the wrong people as Hashim and Sumitro
\nwere no longer owners of the two banks.<\/p>\n
He further said that an out-of-court settlement depended on
\nIBRA appraising the assets it took over from the two banks.<\/p>\n
IBRA, he said, took over banks' assets as part of recovering
\ntheir debts to the government.<\/p>\n
According to him, without an asset appraisal, IBRA and the two
\nbanks would remain in disagreement over how much the banks had to
\npay the agency to cover their debts.<\/p>\n
The next hearing between IBRA and the two banks will be held
\nin two weeks.(bkm)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/bank-istimarat-bank-pelita-seek-out-of-court-deal-1447893297",
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