Former bank owners not to be subject to criminal charges
The Jakarta Post, Jakarta
Ignoring widespread criticism, the government is pushing ahead with its plan to drop criminal charges against former bank owners accused of abusing state funds.
The Financial Sector Policy Committee (FSPC) approved on Thursday a proposal by the Indonesian Bank Restructuring Agency (IBRA) to provide release and discharge (R&D) status for Sudwikatmono (former owner of Bank Surya), Ibrahim Risjad (Bank RSI), Hendra Liem (Bank Budi Internasional) and The Nin King (Bank Baja) after they have repaid their debts to the state.
"They will get R&D because they have settled all their obligations. We'll only have to wait for the next Cabinet meeting on Dec. 16 to determine the mechanism," said IBRA chairman Syafruddin Temenggung following a meeting with the FSPC.
The committee, which groups several 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.
The four ex-bankers are among 35 tycoons whose banks received more than Rp 140 trillion (US$15 billion)-worth of government liquidity support to help them cope with massive bank runs in the wake of the 1997 regional financial crisis. But it turned out that many of the bankers misused the loans by channeling them to affiliated businesses or for speculating against the ailing rupiah.
The government has issued bonds to cover the bank bailout measure and taxpayers will have to shoulder the interest on the bonds.
The largest violators include the Salim family (the founders of Bank BCA), Sjamsul Nursalim (of the now-defunct Bank BDNI), and Mohamad "Bob" Hasan (of the now-defunct Bank BUN). They not only misused the facility but also breached the legal lending limit ruling, by channeling most of their banks' money to affiliated businesses.
Syafruddin also said that FSPC was still reviewing the status of Salim, whose debts total some Rp 52.7 trillion.
"However, what's left is just technicalities," he said, adding that in principle FSPC had indicated its intention to grant Salim R&D as well.
IBRA has argued that granting R&D status to them was in accordance with what had been stipulated in the shareholders' debt settlement schemes signed between the government and the debtors in 1998.
Thus, IBRA added, granting them R&D would give them legal certainty.
The schemes comprises three types of debt settlement. The most controversial is the Master of Settlement and Acquisition Agreement (MSAA) mechanism.
However, the plans to get them off the hook have met strong public criticism.
Critics argue that the ex bankers, despite having settled their debts, still have to face criminal charges for breaching banking regulations and misusing the central bank's liquidity support funds.