Gus Dur comes under fire

JAKARTA (JP): President Abdurrahman Wahid's instruction to delay the prosecution of three of the country's top indebted businessmen could damage the economy and the legal system, analysts here said on Friday.

Lin Che Wei, an analyst at a foreign securities firm, said the move would create legal uncertainty because people would think that the President could intervene in legal proceedings and that a legal process could be influenced by a "business deal."

"Instead of helping the economy, I think this is very damaging to the business environment," Che Wei said.

Abdurrahman, popularly known as Gus Dur, disclosed his controversial decision in Seoul during a gathering with the Indonesian community in South Korea.

Gus Dur admitted that he had ordered the Attorney General's Office to delay the prosecution of Texmaco Group chairman Marimutu Sinivasan, Barito Pacific Group chairman Prajogo Pangestu, and the chairman of the Gadjah Tunggal Group, Syamsul Nursalim.

"This (move) is necessary because the business groups are major exporters who can contribute greatly to the economic recovery process," the President said.

The three businessmen owe billions of dollars in bad debts to the Indonesian Bank Restructuring Agency (IBRA), a unit of the finance ministry.

Che Wei said that if the government wanted to boost exports it should focus on industries with high competitive advantages.

"Textiles is one example, but certainly not petrochemicals or the shrimp farming business," he said.

Prajogo is the co-owner of PT Chandra Asri, a petrochemical center in West Java, whose debt restructuring process has been criticized as a government bailout.

Syamsul is the owner of an integrated shrimp industry company PT Dipasena, which had been pledged to IBRA to repay debts to the government, but its assets have been deteriorating sharply due to disputes with local shrimp farmers.

"The problem is that the spirit (of the President's decision) is not to save the industry but to save the businessmen," Che Wei pointed out.

He stressed that legal certainty was crucial to revive investor confidence in the economy.

Separately, Center for Strategic and International Studies (CSIS) economist Hadi Soesastro said that the controversial decision would create a bad precedent.

"Other indebted conglomerates would also demand similar treatment," Hadi said.

IBRA has received $31 billion in bad loans from the country's banking sector. About $26 billion of the total is owed by only around 20 of the largest debtors, including the three business groups.

The agency has often warned it will take strong legal action against debtors who are not willing to negotiate debt restructuring in good faith.

IBRA is also trying to force former bank owners, including Syamsul (former owner of the now defunct Bank BDNI), to add more assets to repay their banks' debt to the government. Coordinating Minister for Economic Affairs Rizal Ramli has said that legal action would also be taken against uncooperative ex-bank owners.

"It is very important that the government provides the same treatment in dealing with IBRA debtors," Hadi said.

Amien Rais, Speaker of the People Consultative Assembly (MPR), deplored the President's remarks, citing them as a bad legal precedence.

"The three conglomerates' sins are unforgivable. There should be no apology for those who embezzled hundreds of trillions of rupiah belonging to the people," Amien retorted.

He said the reasons given for the President's decision were groundless.

"Seen from a legal aspect, the three businessmen's status is actually not much different from that of Mohhamad Bob Hasan," Amien added.

Separately, House of Representatives Speaker Akbar Tandjung said he did not see any reasonable connection between the three tycoons' case with their supposed major contribution to economic development.

"The three tycoons should be prosecuted if they are guilty. The primacy of the law must be upheld and all should be treated equal in the face of the law," he said after attending a ceremony to celebrate the Golkar Party's anniversary here on Friday.

He said Golkar did not support the President's stance.

The government recently came under strong criticism from the International Monetary Fund and World Bank for what they called questionable debt workout deals with four conglomerates.

In May, the Attorney General's Office stopped investigations into corruption allegations against Sinivasan, saying that there was simply no evidence of wrongdoing related to Texmaco's loans from state banks.

Revrisond Baswir of Gadjah Mada University saw Abdurrahman's move as an attempt to nurture a special group of conglomerates as his cashcow, just as his predecessors Soekarno and Soeharto had done.

"I think a money machine is what is really on his mind," Revrisond was quoted as saying by detik.com news portal in Yogyakarta.

Teten Masduki of the Indonesian Corruption Watch said the President's decision is nonsense. It's aimed only at protecting the bad conglomerates.

"Taking legal action against criminals will not hamper the economic wheels," Teten said.

"This is a bad policy of the current government," he added.

Farid R. Faqih, coordinator of Government Watch (GOWA), shared Teten's view, saying the President's decision was entirely illogical.

"Their businesses will still be able to run normally even if legal action is taken against the founding shareholders," Farid said.

Moreover, since the three business groups have now been under government control, legal proceedings against the three businessmen would not in anyway stop the businesses' operations, Farid said. (rei/rms/bby)