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)