Big debtors cleared<\/p>\n
The Indonesian Bank Restructuring Agency (IBRA), which will
\nentirely shut down its operations later this month, has been busy
\npressuring large debtors to settle their debts to the government.
\nMore than 20 of the estimated 38 large debtors who were formerly
\nthe majority shareholders in the banks that suffered insolvency
\nin 1998 and 1999 have thus far signed closing agreements with the
\ngovernment to resolve once and for all their debts.<\/p>\n
Sjamsul Nursalim, former controlling owner of the now defunct
\nBank Dagang Nasional Indonesia and the Gajah Tunggal business
\ngroup, signed a closing agreement last week after a government
\naudit concluded that the assets he had pledged in 1999 to settle
\nhis debts had legally been cleared and were considered sufficient
\nto settle his Rp 28.5 trillion (US$3.35 billion) in debt.<\/p>\n
Mohammad \"Bob\" Hasan, IBRA said, would also soon be entitled
\nto a closing agreement after he pledged additional assets to
\nsettle his debts of Rp 5.34 trillion.<\/p>\n
A closing agreement, which automatically releases and
\ndischarges the debtor from all civil and criminal liability in
\nrespect of their debts, is concluded with former bank owners who
\nsigned shareholder settlement agreements with the government in
\n1998 and 1999 to settle their debts. These large debtors owed an
\nestimated equivalent of almost US$15 billion. But such a final
\nclearance document is issued only after a government audit
\nascertains that the value of the assets pledged by the debtors is
\nsufficient and their legal status is clear.<\/p>\n
However insulting these deals granting impunity may be to the
\npublic's sense of justice, they are legally the right measure.
\nThe government is legally bound to honor the sanctity of any
\ncontracts it has signed as long as the other contractual parties
\nalso fulfill their part of the deal.<\/p>\n
It is now futile, though, to debate the shareholder settlement
\nagreements, which were hurriedly concluded by the B. J. Habibie
\nadministration with the largest debtors, apparently out of fear
\nthat further delays would allow the debtors to strip most of
\ntheir assets and transfer them overseas.<\/p>\n
The provisions that automatically release and discharge the
\nformer bank owners of all civil and criminal liability related to
\nviolations of the banking laws once they have resolved all their
\ndebts may now appear legally irrational, but they seem to have
\nbeen the only deal the government could then offer to be able to
\nlegally tie up the remaining assets of the debtors.<\/p>\n
One should remember that the nation was mired in the height of
\nits multidimensional crisis between 1998 and late 1999, and what
\nthe government did then should be judged against a background of
\nthe crisis rather than normal conditions.<\/p>\n
It is nevertheless mind-boggling to see that very few of the
\nuncooperative debtors have so far been brought to justice even
\nthough many of them have long been accused of committing banking
\ncrimes and other forms of business fraud.<\/p>\n
The government had threatened resolute legal action as early
\nas 2000, claiming that most of the 38 large debtors had been
\nuncooperative, had failed to fulfill the commitments stipulated
\nin their debt-settlement accords and that the value of the assets
\nthey pledged to the government seemed to have been grossly
\noverstated. But, the law enforcement agencies have so far failed
\nmiserably to produce solid legal evidence proving that the
\ndebtors had signed the agreements in bad faith or had defaulted
\non their commitments.<\/p>\n
Only legal evidence of noncompliance and bad faith will enable
\nthe government to declare the original debt-settlement accords
\nvoid and to bring non-cooperative debtors to justice. Inadequate
\nevidence would only embroil the government and the debtors in
\nprotracted legal battles, which could block the sales of the
\npledged assets or put in legal limbo the assets which had been
\nsold to new investors with devastating results for the economy.<\/p>\n
The biggest challenge now is to enforce the debt-settlement
\nagreements so as to fully satisfy the public's sense of economic
\njustice. This will be achieved only if the debt resolution
\nprocess is transparent and credible and gains a relatively high
\nrate of recovery.<\/p>\n
Out-of-court debt settlements that are perceived to
\nexcessively favor the debtors will only plant a time bomb that
\ncould explode into social and political discontent with damaging
\nrepercussions for the economy.<\/p>\n
IBRA should be very careful in assessing whether the debtors
\nhave fully implemented what the former bank owners have agreed on
\nand pledged in their shareholder settlement agreements before
\nclearing them from further liabilities, and releasing and
\ndischarging them the possibility of legal action in the criminal
\nor civil courts based on the closing agreements.<\/p>\n
Closing agreements with debtors that are seen to be unfair or
\nwhich were hurriedly concluded mainly to meet the April 30
\ndeadline for the final winding-up of IBRA's operations could
\nplunge the deals into a legal limbo after the new government
\ncomes to power in October.<\/p>\n
____________<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/big-debtors-cleared-1447893297", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }