Ex-bank owners freed from criminal charges

Ex-bank owners freed from criminal charges

Fabiola Desy Unidjaja and Dadan Wijaksana, The Jakarta Post,
Jakarta

The government finally agreed on Friday to exempt former bank
owners deemed cooperative in settling their debts to the state
from criminal charges, dashing public hopes for justice.

The decision was finalized at a Cabinet meeting chaired by
President Megawati Soekarnoputri.

Speaking to reporters after the meeting, State Minister of
State Enterprises Laksamana Sukardi said that a presidential
directive for the "release and discharge" (R&D) status of the
cooperative debtors would be issued soon, and the President would
later decide on who would sign the ruling.

Laksamana stressed that the decision to exempt the ex-bank
owners from criminal charges was in line with existing
regulations.

He pointed out the People's Consultative Assembly (MPR) decree
of 2000 which stipulates that the government must be consistent
in implementing the initial debt settlement agreements signed
between the debtors and the Indonesian Bank Restructuring Agency
(IBRA) four years ago.

Under the debt settlement schemes, debtors who have fulfilled
the terms of the agreement must be awarded with the R&D status.

"As stated by the law and the MPR decree, the government needs
to be consistent in this matter, by releasing cooperative debtors
and punishing uncooperative ones," Laksamana said.

The Cabinet meeting was held to evaluate a recommendation made
last week by the Financial Sector Policy Committee (FSPC), which
agreed with the Indonesian Bank Restructuring Agency (IBRA)'s
proposal to issue the R&D status to four cooperative debtors.

The four debtors are Ibrahim Risyad (Bank RSI), Sudwikatmono
(Bank Subentra and Bank Surya), Hendra Liem (Bank Budi
International) and The Nin King (Dana Bank Hutama). The banks had
all been closed down by the government.

FSPC, which groups together senior economic ministers, has the
final say on any major transactions planned by IBRA, which is in
charge of collecting debts owed by former bank owners to the
state.

There are 35 business tycoons whose banks had received some Rp
144.5 trillion (US$16 billion) in liquidity loans from the
government to help them cope with massive bank runs following the
1997 economic crisis.

However, according to a finding by the Supreme Audit Agency
(BPK) conducted later, it was revealed that many of the bank
owners had abused the funds and had channeled them into
affiliated businesses, or had used the liquidity funds for
speculating against the ailing rupiah.

The bankers had violated the legal lending limit ruling by
channeling most of the banks' money to affiliated businesses, an
illegal practice which contributed to the banking crisis.

To avoid criminal charges, the debtors agreed to sign the
shareholders' debts settlement scheme with the government in
1998.

The scheme was divided into three agreements, namely the
Master of Settlement and Acquisition Agreement (MSAA), the Master
of Refinancing and Notes Issuance Agreements (MRNIA) and the
Deeds of Indebtedness (APU).

IBRA has argued that granting the R&D status to the four was
in line with what had been stipulated in the debt settlement
agreement, and by granting them R&D status, it would give them
legal certainty.

However, since the government had to issue bonds to cover the
cost of bailing out the troubled banks, the interest on which
would inevitably be borne by taxpayers, the plans drew furious
criticism from the public.

The criticisms question the legalities of how anyone who has
committed a crime against the state can walk free, simply because
they had settled their debts.

In response, Minister of Justice and Human Rights Yusril Ihza
Mahendra said he acknowledged the fact that the debt settlement
agreement ran counter to the existing regulations since their
inception.

However, he said, since the agreement had been legitimately
signed with the previous government, the current government was
left with no choice but to abide by it.

"From the start, the MSAA cases have run against our legal
principles, but the present government cannot annul the agreement
because it had been agreed upon with the earlier administration,"
Yusril said at a seminar here.

However, he added that even though the R&D status was issued,
it would not be a permanent status, meaning that it could be
revoked if new incriminating evidence was found.