Teaching devious business tycoons a lesson<\/p>\n
Widodo Dwi Putro, Institute for Social and Economic Research,
\nEducation and Information (LP3S), Jakarta<\/p>\n
Debtors formerly owning or managing banks have yet to return
\nhundreds of trillions of rupiah of state funds that they obtained
\non loan. Originally, problem banks obtained this money under the
\nBank of Indonesia Liquidity Support (BLBI) program, a loan scheme
\nintended to set them free from the squeeze of the monetary
\ncrisis. What has happened, however, is a breach of promise and
\ntrickery. These debtors have become smarter, more cunning in
\nevading their debt responsibilities. Quite a few of them have
\ngone abroad while many others have all of a sudden become ill or
\ndestitute.<\/p>\n
The attitude of these debtors reflects the Dutch saying \"hoe
\ngrote geest, hoe groter beest\", the smarter someone is -- in the
\ncontext of a business tycoon, the richer he is -- the beastlier
\nhe will become.<\/p>\n
Bad debts would never have occurred if the government's policy
\ndid not excessively pamper business tycoons. The case of these
\nbad debts would not have been protracted if law enforcement
\ninstitutions had from the very beginning -- i.e. when the loans
\nwere channeled -- considered bad debtors and parties extending
\nthe loans as criminals.<\/p>\n
Those involved in loan channeling -- be they direct
\nperpetrators, the parties asking the loans to be channeled or
\nthose persuading or abetting the channeling of the credits --
\nmust be prosecuted because the loans extended to these debtors
\nexceeded the credit ceiling (BPMK) permitted by virtue of Law No.
\n10\/1998 on the principles of banking affairs. A criminal
\ninvestigation into this case can be conducted even if there is no
\ncomplaint from the Indonesian Bank Restructuring Agency (IBRA).
\nIBRA's decision to postpone any legal action against bad debtors
\nfor three months is irrelevant in the criminal proceedings of the
\ncase.<\/p>\n
In addition, as a civil case, it carries a penalty which is no
\nless severe than the punishment demanded when the case is
\nconsidered a criminal one. Supreme Court Regulation No. 1\/2000
\ncarries the penalty of imprisonment for debt in the case of
\ndefaulting big-wig debtors. So, ill-meaning debtors can then be
\nincarcerated in state penitentiary set by the relevant court of
\nlaw and forced to meet their obligations. Prison terms for this
\ncrime are for six months and can be renewed every six months for
\na maximum of three years.<\/p>\n
Some circles, however, have objected to the imposition of this
\nimprisonment-for-debt penalty, arguing that in a civil case a
\npenalty like this is tantamount to a human rights violation. This
\nargumentation is lame as the imprisonment-for-debt penalty
\nstipulated in Supreme Court Regulation No. 1\/2000 is quite
\ndifferent from the instrument of hostage-taking regulated in
\nArticles 209 and 224 of the Criminal Code.<\/p>\n
The difference is that by virtue of the Supreme Court
\nregulation, the penalty is imposed on financially capable
\ndebtors who refuse to pay their debts. This is confirmed in
\nArticle 4 of Supreme Court Regulation No. 1\/2000, which
\nstipulates that imprisonment-for-debt will only be imposed on
\n\"big-wig\" debtors sustaining debts of no less than Rp 1 billion.<\/p>\n
Therefore, it is irrelevant to claim the imprisonment-for-debt
\ninstrument is against human rights because it is these business
\ntycoons who have really violated human rights by refusing to pay
\nback their debts. This refusal has damaged the state's economy,
\ninflicting greater losses than the purported violation of a
\nperson's human rights when they are subjected to imprisonment for
\ndebt. Besides, these delinquent debtors feast upon the state's
\nfunds or, more accurately, they can be considered as having
\nlooted the public's money.<\/p>\n
Since the Supreme Court issued its imprisonment-for-debt
\nregulation, there has not been a single bad debtor subjected to
\nthis penalty. It is often the case that efforts to apply the
\nimprisonment-for-debt stipulation on a bad debtor often fail at
\ncourt.<\/p>\n
Take, for example, the Gondokusumo family of the Darmala
\nGroup. DeMat Investment (a subsidiary of Darmala), has borrowed
\nUS$13 million from Danamon Bank. They could actually settle their
\ndebts but, unfortunately, have been totally non-cooperative. So,
\nIBRA filed a request to the South Jakarta District Court,
\nrequesting the court hand out prison sentences to five members of
\nthe Gondokusumo family. However, the request could not be granted
\nby the council of judges on the grounds that the evidence
\npresented was not in order.<\/p>\n
Another example also occurred at South Jakarta District Court,
\nwhich rejected a request for imprisonment for debt as made by the
\nIBRA against one of the giant debtors, Wellwin Finance (HK)
\nLimited (Ongko Group). In fact, the debtors admitted sustaining a
\ndebt to the state totaling Rp 270 billion, an amount of money
\nthat is too large for them to pay back. Of course, this failure
\nof IBRA to impose prison sentences on bad debtors has not only
\ndisadvantaged the state but also the entire Indonesian people,
\nwho are currently enduring an acute economic crisis.<\/p>\n
The public can actually play a significant role as a pressure
\ngroup without having to violate the law. They can creatively take
\na position as part of the legal culture by urging business
\ntycoons to comply with the law.<\/p>\n
By comparison, in countries where people enjoy a high level of
\nlegal consciousness, irresponsible business tycoons are
\nostracized and are not easily able to have long-term
\nrelationships with other businessmen. A good example is what
\nhappened in the Philippines, where the public once boycotted a
\nbeverage product because they believed the producer had inflicted
\nhuge losses to the people and the state.<\/p>",
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