IBRA 'can do more to nab bad debtors'
IBRA 'can do more to nab bad debtors'
Berni K. Moestafa, The Jakarta Post, Jakarta
Rejecting the government's excuse for its failure to bring bad debtors to court, legal experts say the Indonesian Bank Restructuring Agency (IBRA) possesses enough special powers to prosecute bad debtors, but has not used them.
The government has instead formed an interministerial team to remedy its floundering efforts to recoup billions of U.S. dollars spent on ailing banks from reluctant debtors.
"We don't need a team ... the issue is very simple: prosecute bad debtors," noted legal expert Todung Mulya Lubis told The Jakarta Post over the weekend.
With Government Regulation No. 17/1999, which forms the legal basis of IBRA's authority, the agency comes armed with special legal powers to confront bad debtors.
IBRA has the authority to seize company and personnel assets of bad debtors, annul third party deals detrimental to IBRA, claim compensation on past harmful bank transactions, and more.
But its inability to utilize these advantages, and the lack of support from the judicial system, has led IBRA to suffer one defeat after another, Todung said.
Last week, IBRA chief I Putu Gede Ary Suta disclosed that out of 230 verdicts on lawsuits filed by IBRA, it had lost nearly all.
The government blamed the poor track record on weak law enforcement and the fact that IBRA often held unfavorable contracts with debtors.
Yet what appears to be IBRA's most powerful legal tool against uncooperative debtors has been left aside by its lawyers.
Under the Supreme Court Regulation No. 1 /2000 on the imprisonment of civil debtors, IBRA can send debtors to prison just for being uncooperative.
Once convicted, debtors cannot appeal the verdict, said Rahmat Bastian, an expert on bankruptcy cases.
"This is a powerful tool to force debtors into paying. Nobody wants to go to prison," he said.
To his knowledge, IBRA has attempted to punish uncooperative debtors using this regulation only once. It failed, Rahmat said.
He explained IBRA feared the backlash of a counter suit if it used its special legal powers.
IBRA's authority rests on a government regulation which gave it legal powers that trespass existing laws, he said.
"The courts don't like this; they would be open if somebody wants to counter sue IBRA," according to Rahmat.
Both, Rahmat and Todung lambasted the country's poor judicial system, which they said was prone to bribery and political interference.
Todung urged the Supreme Court to set up its judicial commission to scrutinize dubious verdicts in courts.
"Make an example out of someone and punish corrupt judges, in three to six months time, they'll know someone is watching them," he said.
Rahmat added that it was imperative for IBRA to win the court's full cooperation, and ensure the latter understood the importance of recouping public funds.
In that effort, the government has come under fire for passing an IBRA sponsored plan to go easy on uncooperative debtors.
The plan extends debtors' payment period to up to 10 years from four, and effectively lowering the interest rates they must pay.
IBRA's Ary Suta argued debtors needed more time to repay their debts, as otherwise they might not pay at all.
The debtors in question are former bankers whose banks the government bailed out from the impact of the financial crisis.
But it turned out that most had abused the funds, which led to the state suffering losses of some Rp 138.4 trillion (about $13 billion).
Under the 1998 shareholders settlement program, the former bankers may escape prosecution if they agree to repay their debts with assets and cash payments.
Three years into the program, most debtors have yet to start paying, a situation that renders them as uncooperative and thus calls for legal action.
Despite this, debtors remain free of any legal consequences, and are instead being offered easier terms on their debt payment.
The decision stirred public outcry, with critics pointing at the government's no-compromise move on hiking fuel and power prices, which hurts the poor the most.
In response, the government promised tougher legal actions, but stands firm on its debt extension plan.
Lawyer Amir Syamsuddin suggested IBRA revamp its legal unit and raise its litigation success rates before anything else.
"Many of IBRA's lawyers are simply underqualified," he lamented.
Rahmat said these inexperienced lawyers were selected through a tender that favored the least costliest legal representation.
"IBRA should focus on fewer cases and save the money on experienced lawyers who can better guarantee the return of state funds," he said.
Head of IBRA's litigation division, Robertus Bilitea said he was not yet prepared to comment when contacted.
IBRA's legal power under Government Regulation No. 17/1999
(Article -- Powers): 19 -- Annul and review agreements detrimental to IBRA; 21 -- Vacate properties owned by banks or firms under IBRA; 42 -- Investigate parties harming IBRA's interests; 44 -- Seek compensation from dubious bank deals; 58 -- Seize all assets from uncooperative debtors.