Former bank owners not to be subject to criminal charges

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.