Govt fears backlash if IBRA debtors released: Experts

Govt fears backlash if IBRA debtors released: Experts

The Jakarta Post, Jakarta

The government's indecision over who should sign the documents
to drop criminal charges against former bankers who had abused
trillions of rupiah in state loans showed that officials feared
their decision could spark a public backlash, experts have said.

They warned that attempts to avoid responsibility also called
into question the credibility of any decision to release the ex-
bankers.

"I suspect everybody is just trying to avoid responsibility,"
said lawyer Frans H. Winarta on Wednesday.

Controversy has returned over the handling of former bankers
who abused some Rp 138 trillion (about US$15.28 billion) in
government funds and violated banking regulations following the
1997 economic crisis.

Their actions have annually cost the government trillions of
rupiah in interest payments on bonds that were issued to
safeguard their banks from collapsing.

Under the shareholders settlement program, the ex-bankers
agreed to repay the abused funds in return for not facing
prosecution.

The agreement was signed by the Indonesian Bank Restructuring
Agency (IBRA), which is in charge of recouping the lost funds.

IBRA recommended on Monday that the government release four of
the 35 former bankers, reasoning that they had settled their
debts.

But a decision over who should approve that move has not been
made. The government said that by early December President
Megawati Soekarnoputri would appoint the officials who would sign
the release and discharge documents.

Signing the papers, however, means that those officials could
be later held accountable by the public who might disapprove of
the decision, said Frans.

He said that since it was IBRA who signed the settlement
program with the bankers, the agency should also be the one
signing the documents.

IBRA chairman Syafruddin Temengung suggested on Tuesday that
the decision should rest with the Coordinating Ministry for the
Economy and the Attorney General's Office.

IBRA's overseer, the Financial Sector Policy Committee (FSPC),
however, might not approve of any of its recommendations yet.

Quoted by detik.com, FSPC chairman Coordinating Minister for
the Economy Dorodjatun Kuntjoro-Jakti said the FSPC would discuss
IBRA's recommendations and forward them to the Cabinet meeting
for President Megawati to decide.

"This is so typical. Officials first wrestle for power but
when it comes to taking responsibility for the power they have,
everyone just wants to avoid it," said banking analyst Lin Che
Wei.

He said the release and discharge documents were supposed to
be signed at the same time that IBRA signed the shareholders
settlement program with the former bankers.

The fact that nobody did, he said, showed that the previous
administration knew of the trouble their signatures might cause.

However, delaying a decision is not an option anymore as for
most debtors, their settlement program is nearing the deadline.

IBRA's proposal earlier this year to extend the program by
another 10 years was voted down under a wave of public protests.

Che Wei added that the officials' uncertainty showed that they
were unsure if the decision to release the debtors would stand up
against public suspicion that the debtors were cheating on their
repayments.

Analysts have long suspected that the debtors had made minimal
repayments and surrendered assets, which they later bought back
from IBRA at heavily discounted prices using third parties.