Government faces rising calls to annul policy for debtors

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."