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.