Govt urged to take legal action against bad debtors

Govt urged to take legal action against bad debtors

Adianto P. Simamora, The Jakarta Post, Jakarta

The government should no longer negotiate with uncooperative
debtors of the Indonesian Bank Restructuring Agency (IBRA) and
should take legal action by bringing them to court, according to
the chairman of the National Economic Recovery Committee (KPEN),
Sofjan Wanandi.

Meanwhile, University of Indonesia economist Muhamad Ikhsan
said the government needs to import judges from the Netherlands
to handle cases involving bad debtors.

There has been concern that Indonesian judges are too weak and
prone to bribery by the indebted but powerful business tycoons.

The two were commenting on Monday on the government's decision
last week to give three months to bad debtors to repay their
massive debts to the government.

The decision annulled an earlier, much-criticized proposal
from IBRA chairman I Putu Gede Ary Suta to give another 10 years
to former bank owners to repay some US$13 billion in government
emergency loans injected into their banks in the wake of the 1997
financial crisis. Most of the bankers misused the loan facility.

Some 33 former bank owners entered into an agreement in 1998
with IBRA to repay their debts by surrendering assets and cash.
The agreement is supposed to expire this year, but, so far, most
of the conglomerates have failed to fulfill their obligations.

"There is no need to renegotiate with uncooperative
debtors...," Sofjan told The Jakarta Post, adding that the
government must already have a list of offenders.

But he said that it was unnecessary to bring in foreign judges
to handle court cases involving bad debtors.

Previous attempts to prosecute bad debtors through legal means
have proved futile due the country's corrupt court system. IBRA
has lost nearly all of the cases it has brought to court. This
has been compounded by IBRA's weak legal position under the 1998
debt settlement deals it signed with the conglomerates.

The country's weak legal system has become one of the main
reform targets of international donors like the World Bank and
the International Monetary Fund (IMF).

Elsewhere, Sofjan said that the government should come up with
a workable debt settlement plan for cooperative debtors.

Ikhsan added that the government should provide incentives for
cooperatives debtors.

Cash settlements by indebted former bank owners is one of the
key sources of income to plug the 2002 state budget deficit.