Bank Jakarta's liquidation halted

JAKARTA (JP): The Jakarta State Administrative Court supported yesterday the request of Bank Jakarta to remain open pending a final court verdict in its battle against its closure by the government.

"The ministerial decree and the central bank gubernatorial decree have been postponed," presiding judge Lintong Oloan Siahaan said in his ruling on the bank's case against the government.

The court ordered the first defendant, Minister of Finance Mar'ie Muhammad, to suspend his decree No.533/KMK.017/1997 on the liquidation of the bank on Nov. 1.

The court also ordered the second defendant, Bank Indonesia (the central bank) Governor Soedradjad Djiwandono, to postpone his decree No.30/125/Kep./Dir on the appointment of Bank Jakarta's caretaker for the liquidation of its assets.

The bank is owned by Probosutedjo, a half-brother of President Soeharto, who not only strongly protested the bank's closure but also kept it open in defiance of Mar'ie's ruling.

"This decision is based on Article 67, Clause 4, Point A of Law No. 5/1986 on the State Administrative Court," Lintong told reporters.

The clause stipulates that a government decree can be postponed if it inflicts a great loss on the plaintiff.

"The plaintiff has mentioned a number of necessary conditions which should be considered," Lintong said.

According to the plaintiff, he said, the bank liquidation last month resulted not only in a loss of profit but also cost some 250 employees their jobs.

Moreover, Lintong said, the liquidation had threatened the survival of companies that deposited their funds in the bank.

"So, the panel of judges considered the plaintiff's interests to be more important as the defendants' lawyers have failed to specify what it was they meant by (when they said the closure was) in the public interest," Lintong said.

The government's lawyers did not say whether they would appeal, but lawyer Luhut M.P. Pangaribuan said the team would file a letter of objection to the court. He said the liquidation had been conducted as part of the country's economic reform needed to cope with the financial crisis.

One of the plaintiff's lawyers, Abdul Fickar Hadjar, said the court's decision would now enable the bank to pay back its depositors.

"It is also important that we can now collect the bank's credit," Hadjar said.

Normal

Probosutedjo told journalists that following the court decision the bank could operate normally, as before.

"But, we have not yet decided when we will operate normally again," he said.

Probosutedjo said the bank would soon settle its obligations to all its depositors.

"First of all, we will disburse our funds deposited in Bank Indonesia, the central bank, totaling Rp 15 billion," he said.

This deposit is Bank Jakarta's reserves, to meet the central bank's statutory reserves requirement of 5 percent of Bank Jakarta's third-party funds.

Depositors

The funds would be used to pay the remaining depositors.

Depositors with savings of up to Rp 20 million have already been paid by the government, through three state banks, using bridging finances.

Probosutedjo said that Bank Jakarta had another Rp 12 billion of funds borrowed by other banks through the inter-bank market.

"With this decision, we will demand all our funds from other banks," he said without mentioning the banks.

Before the closure Bank Jakarta had total assets of some Rp 300 billion.

Probosutedjo was one of two bank owners who filed a suit against the government over the closure of their banks. Probosutedjo filed the lawsuit on Nov. 7.

Bambang Trihatmodjo, Soeharto's second son, withdrew his lawsuit last month citing "the national interest" as the reason.

The closure of the 16 ailing banks was part of an economic reform package demanded by the International Monetary Fund in exchange for its US$23 billion bailout to help the troubled Indonesian economy recover. (10/rid)