IBRA bashing
Analysts, senior officials and the media have of late been increasingly critical of the Indonesian Bank Restructuring Agency (IBRA), which will end its government mandate later this month, due primarily to two reasons.
One is the recent disclosures by print media of what the public perceives to be the indecently huge packages of compensation IBRA senior officers have been enjoying.
The other is the proposal the IBRA reportedly made that the government provide all the agency's employees and members of its supervisory board -- including the ministerial Financial Sector Policy Committee -- with immunity against damages or law suits that may arise in the future from the execution of their jobs.
Minister for State Enterprises Laksamana Sukardi said on Wednesday the IBRA had never asked for immunity from lawsuits. However, provisions in the draft of the presidential decree, which is being prepared for the official termination of the agency, did allude to such a request.
Controversy, intense public scrutiny and fierce criticism have always surrounded the IBRA since it was established in early February, 1998. Unsurprisingly -- as it became, at least during the first three years of its operations, the most powerful economic organization in the country. The IBRA managed more than Rp 650 trillion (US$75 billion) worth of assets taken from closed and nationalized banks and controlled all the largest financial institutions in the country.
No wonder then, the agency has so far seen seven successive chairmen amid incessant political meddling by senior officials and vested-interest groups.
Given its vitally important mission -- to recover a large amount of value from assets left behind by the 1997-1999 economic crises -- the IBRA was granted extra-judicial power to foreclose on the assets of debtors and to file civil lawsuits and bankruptcy petitions against debtors.
However, recent revelations by print media of what the public perceives to be huge compensation packages enjoyed by IBRA senior officials have put the agency in even hotter water.
IBRA chief Syafruddin A. Temenggung, for example, has reportedly been enjoying a monthly take-home pay (net) totaling Rp 130 million ($15,300), consisting of Rp 75 million in basic salary and Rp 55 million worth of other allowances for accommodation, insurance, a car, a driver, and even gasoline. His deputies brought home Rp 111 million monthly, including allowances. Since severance allowances are based on salaries, these senior officials will get impressive golden handshakes later this month when the IBRA shuts down. It's unsurprising the public views these payouts as the height of greediness.
But IBRA senior officials do deserve high salaries given their large responsibilities. They should be adequately remunerated to minimize corruption because the nature of their jobs exposes them to the heady temptations of malfeasance. Yet their reward for service does seem high, if compared with those of Cabinet ministers, who get only Rp 19 million in monthly basic salaries plus housing and car allowances.
Moreover, the IBRA's performance hasn't been so impressive that its senior officers deserve such lucrative packages. The agency has been able to recover only an average of 34 percent of the assets under its management, compared to similar operations in South Korea and Thailand, which netted 40 percent and 39 percent respectively.
Yet even more mind-boggling is the request the IBRA reportedly made for legal immunity (acquit de charge) for all its employees against damages and litigation in the future.
That request, if it was actually made, is entirely irrational and insensible, especially because IBRA has yet to undergo its own investigative audit. All criminal cases that may subsequently be discovered during investigative or forensic audits should be brought to court and the culprits should be brought to justice.
We do, however, strongly suggest that IBRA employees and supervisors be granted indemnity against suits that may arise in the execution of their duties -- as long as those duties are proven to have been executed properly.
We should differentiate honest mistakes from collusive practices or corruption. IBRA officials should be indemnified against damages caused by honest mistakes or unintentionally poor judgment. Nobody in the government would have the courage to make any decisions if its officials were not indemnified against damages or litigations caused by honest mistakes.
The IBRA has thus far concluded tens of thousands of transactions related to the assets under its management. As long as the deals were made according to standard operating procedure its employees should be fully indemnified against possible litigation.
Without such an indemnity insurance, IBRA employees could be highly vulnerable to blackmail by corrupt police or public prosecutors.