Former bank owners must fulfill debt obligations

Former bank owners must fulfill debt obligations

JAKARTA (JP): The country's powerful former bank owners must
surrender additional assets if the amount pledged earlier was
insufficient to cover the indebtedness of their banks to the
government, Coordinating Minister for Economic Affairs Rizal
Ramli said on Tuesday.

Rizal said that the former bank owners must also provide
personal guarantees to hand over more assets if the value of the
assets they have pledged deteriorates in the future.

"In return, the government will agree to extend the repayment
period of their obligation," he told reporters following a
meeting with the House of Representatives special team on debt
settlement.

He said that the former bank owners would be given until 2004
to repay their obligations.

Rizal said that the new policy was agreed on Monday by the
Financial Sector Policy Committee (FSPC), which oversees the
country's bank and corporate restructuring process.

He also said that the new policy was part of a revision of the
controversial Master of Settlement and Acquisition Agreement
(MSAA).

He said that the government would have to meet again with the
House team on Oct. 3 and Oct. 4 to decide on final revisions.

The MSAA refers to an agreement made in 1998 by several bank
owners with the administration of former president B.J. Habibie.

Under the agreement, the former bank owners agreed to
surrender assets to repay the massive emergency liquidity
supports injected by the government to bail out the banks amid
massive runs.

The government injected more than Rp 144 trillion in liquidity
supports, which according to the Supreme Audit Agency (BPK) were
mostly abused.

The former bank owners include the Salim Group which
previously owned Bank Central Asia, and business tycoons Sjamsul
Nursalim and Mohamad Bob Hasan, respectively the former owners of
the now defunct Bank BDNI and Bank Umum Nasional.

The MSAA became controversial after Kwik Kian Gie, who was
still the country's chief economics minister at the time, called
for a revision of the agreement arguing that implementing the
agreement would cause huge losses to the state and burden tax
payers.

Kwik, who resigned in a major Cabinet reshuffle in August,
pointed out that the assets pledged by the conglomerates were not
enough to cover their obligations leaving the government to
settle the deficit.

Under the initial MSAA agreement, the former bank owners had
no obligation to surrender additional personal assets to cover
any deficit caused by depreciating asset values.

Kwik and his economic team then asked for the help of the
House to settle the issue. The House then appointed a special
team to study the problem.

Kwik told The Jakarta Post on Tuesday that the main principle
in the revision of the MSAA should focus on ensuring that the
state would not suffer losses from implementing the agreement.

"The important principle is that the government or the state
should not suffer any losses. Because if it does, the losses
would have to be born by the tax payers ... that is not fair," he
said.

Kwik said that the other important principle was to ensure
that the former bank owners who had violated legal lending limits
be held accountable for their crimes.

Under the MSAA agreement, the former bank owners were released
from accountability for the banking crimes by surrendering
assets.

But legal experts have said that surrendering assets does not
necessarily mean that the former bank owners were absolved of the
crimes.

Rizal declined to comment on the issue, arguing that the
matter was the concern of Attorney General Marzuki Darusman, who
failed to show up at the meeting.

Marzuki said on Monday that he would meet with the House to
get a "consensus" on the above matters. (rei)