Government faces rising calls to annul policy for debtors
Dadan Wijaksana, The Jakarta Post, Jakarta
The National Legal Commission (KHN) has urged the government to annul a presidential instruction which frees heavily indebted former bank owners from their past banking crimes, in a move that could well resurrect the long-standing debate over the policy.
The commission, in a media release issued over the weekend, said the government had no choice but to annul the instruction, because it runs encounter to existing laws.
"The Inpres (Indonesian acronym for "presidential instruction") contains a clause that orders investigators to terminate criminal investigations against debtors (ex-bank owners) who have signed the MSAA (Master of Settlement and Acquisition Agreement), the MRNIA (Master of Refinancing and Note Issuance Agreement) or the APU (Deeds of Indebtedness). According to the law, can only be issued by the Attorney General.
"So, it's best for the president to annul the Inpres," JE Sahetapy, a prominent legal expert who heads the commission, declared in the release.
He added that annulling the presidential instruction would be in accordance with the principle of "all are equal before the law", and fulfilled the people's sense of justice.
The policy in question refers to Presidential Instruction No. 8/2002 issued by President Megawati Soekarnoputri late last year, which grants a release and discharge status to ex-bank owners who are deemed cooperative in settling their debts to the state. This would effectively clear them from all past charges of violating bank regulations.
While the presidential instruction did not specify the names of the former bankers, some have already been identified as being eligible for the release and discharge status.
The Indonesian Bank Restructuring Agency (IBRA) said five debtors had settled their debts to the state, and therefore were eligible to receive the release and discharge status. These five are: Sudwikatmono, Ibrahim Risjad, The Nin King, Hendra Liem and Sudono Salim.
The five are among the 35 debtors who received Rp 144.5 trillion worth of state funds issued by the central bank during the financial crisis in the late '90s to help their banks stay afloat.
Many of the former bank owners -- among the country's richest business conglomerates during the economic boom of the early '90s -- were later accused by the Supreme Audit Agency to have misused most of the bail-out funds.
Many of them have also been accused of breaching the bank legal lending limit by channeling most of their banks' money into affiliated businesses, which contributed to the devastating financial crisis.
Further, in an effort to avoid criminal indictment, they signed a shareholder's debt settlement scheme with IBRA, which allowed them to settle their debts through cash and assets settlement only.
The MSAA, MRNIA and APU are all subsidiaries of the scheme.
It is these agreements that the government has cited as the legal basis for the issuance of the release and discharge status.
However, the KHS has pointed out that these deals only cover the area of civil law, and not criminal law.
"This means that, when the ex-bankers have fully repaid their debts, they are no longer indebted to the state, but they still have to face criminal charges," the KHN stated, adding that based on the existing judiciary, the civil and the criminal were two different areas of law that could not be mixed.
"We conclude that the MSAA, MRNIA and APU are all legally flawed, and thus, Presidential Instruction No. 8/2002. The instruction cannot be executed in this country because it violates the existing laws."