Thu, 06 Jun 2002

'IBRA can't get money back through corrupt courts'

Dadan Wijaksana, The Jakarta Post, Jakarta

A special team of legal experts has recommended that the Indonesian Bank Restructuring Agency (IBRA) take legal action against former bank owners who have been uncooperative in settling their debts with the government.

However, one huge question lingers on whether the agency could actually win any legal battle against the wealthy ex-bankers given the many losses suffered by IBRA in past court battles.

Noted legal expert Prajoto expressed on Wednesday his pessimism over the prospect of the agency ending up on the winning side, citing the country's corrupt justice system.

"From the judicial point of view, (there is) no doubt IBRA should win. But practically speaking, due to the bribe mechanisms that still flourish in the courts ... the government will eventually have to face the bitter reality that there is almost no chance to beat them," Prajoto told The Jakarta Post.

He said that going straight to trial would be a mistake, which would cause more losses to the state.

He made the statement in response to a report in the Kompas daily on Wednesday that the special legal team assigned by the government to review the performance of some 33 ex-bank owners in repaying debts to the government had finished reviewing nine of the bankers, with a result suggesting that all of them were considered uncooperative at best.

The 33 former bank owners have been charged with misusing most of the Rp 144 trillion in state-funded liquidity loans during the crisis in 1997-1998.

To avoid criminal charges, they agreed to sign an out-of-court settlement agreement with the government in 1998. Most of the agreements expire this year, and most of the debtors have not even begun their debt repayments.

The government must seek ways to recover the loans.

An IBRA proposal to give the indebted bankers another 10 years to repay the debts was scrapped following strong public criticism and high demands to bring the bankers to court and seize their assets.

Under pressure from the public and the International Monetary Fund, the government then assigned a special legal team to filter out the most uncooperative debtors and make recommendations on what legal action should be taken.

The uncooperative debtors will be given three months to settle their obligations before legal action is taken, which may include jail time and asset seizures.

Meanwhile, lawyer Hotman Paris Hutapea, was also of the same opinion as Prajoto, saying that if there was no revision on the so-called shareholders' debt settlement agreements, going to trial would be a waste of time because the agency would lose anyway.

"Revising those agreements should be the government's priority. It's better to take one step back first only to move ahead later, rather than experiencing a total loss," Hotman said.

Meanwhile, Luhut Pangaribuan, a member of the special legal team, said that the team had good reasons to say that IBRA could win the court battle against the ex-bank owners.

"The fact that IBRA's litigation record has been poor so far should not stand in the way of bringing those debtors to justice," Luhut added optimistically.

The nine ex-bank owners are actually considered relatively small debtors when compared to other indebted bank owners like Anthony Salim (former owner of Bank Central Asia) and Syamsul Nursalim (of the now defunct Bank Dagang Nasional Indonesia) who owe the state billions of dollars.

The legal team has yet to complete its review on that group of bank owners who owe total of Rp 88 trillion to the government.