Mon, 08 Aug 1994

Debt collectors held, police vow to crush operations

JAKARTA (JP): Police have arrested two debt collectors as part of its bold campaign to stamp out all collection agencies operating in the city.

City Police Chief Maj. Gen. Mochammad Hindarto told reporters Saturday that police vowed to crack down on debt collecting services as a follow up to the instruction of Chief of the Jakarta's chapter of Bakorstanasda (the Agency for Coordinating Supports for National Stability) Maj. Gen. Hendropriyono.

Hendro, who is also the Jakarta military commander, earlier stated collection agencies had caused trouble and fear among the public as debt collectors were inclined to use physical pressure on debtors in an effort to retrieve the creditor's money. He thereby called on the police to curtail the service.

Hindarto said until recently the police have had no legal grounds to capture debt collectors since they received no complaints from the public.

"We acted based on reports from the public," the two-star general said.

Hindarto was speaking at the closing of the 46th Armed Forces civic action in Tangerang.

Hindarto refused to identify the two suspects who were arrested by police on Saturday, but sources at the city police headquarters said the suspects were identified as Gustav and Tobing.

The two suspects are now in police custody for interrogation.

Martin Winata, 39, who reported the suspects to police, told reporters that Gustav and Tobing along with two friends, who are still at large, were hired by Mrs. King Eng Eng, a resident of Pluit, North Jakarta, to force him to repay his ex-wife's debt.

Martin's ex-wife, Jessica Nalastia, 34, reportedly borrowed Rp 81 million (US$37,710) from Mrs. King in 1992 and thus far had repaid only Rp 13 million ($6,052) of her loan.

Because Jessica had not paid off her loan the four suspects confiscated Martin's car, an old Crown sedan, and ordered him to also hand over a deed to his land as collateral.

On Wednesday, Martin reported the case to police, who later captured two of the heavies Saturday morning at a food shop in Bendungan Hilir, Central Jakarta.

Weak Law

Some lawyers say they fully support the ongoing anti-debt collector campaign in principle as long as it is directed against delinquent thugs who resort to physical and non-physical pressure on the debtors.

Lawyer Hans Pardamean Siagian from the Edward, Hans, Murphy and Partners Law Office and T. Gayus Lumbuun from the T. Gayus Lumbuun & Associates Law Firm said there were many debt collectors using lawful techniques in order to persuade the debtors to repay their loans.

"When it is aimed at curtailing all collection agencies, including the good ones, one will ask what the legal basis behind the purge is? Is debt collecting illegal? Show me the law forbidding the operation of debt collectors?" asked Hans.

In May, Hans spoke about collection agencies at a seminar attended by bankers at the Shangri-La Hotel, Central Jakarta.

In his paper, Hans said that the operation of debt collecting services is legal according to the Civil Code's chapter 1792 which permits someone to hire a third party to collect the money he or she lent to other people on his or her behalf.

"Thus, anyone can be a debt collector," he said.

Hans also said in the paper he presented in the seminar that the birth of collection agencies resulted from the bad loan phenomenon which is rampant today and many resort to heavies because the existing laws fail to protect the rights of creditors.

"The legal process is complicated and time consuming. And there is no certainty that creditors will get back their money. Thus, collection agencies will remain as long as our law system remains weak," Hans stated. (jsk)