First legal review on bad debtors ready by next week

First legal review on bad debtors ready by next week

The Jakarta Post, Jakarta

At least one of the 33 debtors under the Indonesian Bank
Restructuring Agency (IBRA) could become the target of tougher
legal actions, as a legal team to identify IBRA's bad debtors is
to conclude its first review next week.

Head of the legal counsel's directive team, Hadiah Herawati
said on Thursday she expected to have the review ready next week.

"We keep evaluating data from the debtors," Hadiah told
reporters.

The results, however, are subject to review by IBRA's
Oversight Committee (OC) and must be approved by the government.

Last Monday, the government set up a legal counsel to check
debtors' compliance to their debt settlement deals with IBRA.

There are 33 debtors under IBRA's shareholders settlement
program, which is the umbrella scheme for the settlement of their
debts.

The shareholders are former bankers who owe IBRA some US$10
billion mostly in misused liquidity loans, which they agreed to
repay in return for not facing criminal charges.

That may change with the legal counsel's authority to declare
a debtor uncooperative and render the person fit for prosecution.

The counsel, consisting of two teams of legal experts, may
also recommend the government what legal action to take against
the bad debtors.

It has one month to wrap up its work, not including the time
it takes for the IBRA's OC to review it, and for the Financial
Sector Policy Committee (FSPC) to approve it.

The FSPC groups together senior economic ministers and is in
charge of debt restructuring deals worth more than Rp 1 trillion
(about $100 million).

FSPC secretary Syafruddin Temenggung explained earlier that
the counsel would not need to wait for all 33 debtors to be
reviewed before submitting the results to OC and the FSPC.

"It's an ongoing process," he said, explaining that once a
debtor was processed the counsel would move on to the next.

Debtors had three months to meet any shortfalls in their deal.

But there is fear that the bulk of the unpaid debts are locked
up in a settlement scheme where violations may be hard to find.

The infamous Master of Settlement and Acquisition Agreements
(MSAA) hold some $8 billion in mostly unpaid debts of five of the
country's largest conglomerates.

Most have yet to start repaying their debts, but government
officials noted that under the MSAA, this situation did not
necessarily render them as uncooperative.

The MSAA contained no payment schedule which made it hard to
spot violations in the deal, they said.

State Minister of State Enterprises Laksamana Sukardi, who is
in charge of IBRA, explained that MSAA debtors were, according to
the agreement, uncooperative only when their deadlines had
passed.

Although for many, the deadline expires this year, it remains
unclear whether this would be soon enough to get them under the
legal counsel's recommendation for legal actions.

Syafruddin dismissed the worries, arguing that compliance to a
timetable was not the only criteria the counsel would be looking
at.