IBRA should get tough with errant debtors, legislators say

Dadan Wijaksana, The Jakarta Post, Jakarta

The Indonesian Bank Restructuring Agency (IBRA) should get tough against former bank owners deemed to be uncooperative in repaying the huge debts they owe to the government, senior legislators said.

They said the agency should no longer cave in to "time buying" tactics of the recalcitrant debtors.

"IBRA must be tough with them (debtors)," Paskah Suzetta, deputy chairman of the House of Representatives' budget committee said over the weekend.

He was responding to a request last week from the former bank owners for another two weeks before they signed repayment agreements with the agency.

The debtors argued that the extra time was needed to verify the real amount of their debts. Reports had earlier said that the bankers had protested the figures produced by IBRA as being too high.

Some 15 former bank owners were summoned by IBRA on Friday to ask demand the repayment of their debts within three months or would risk legal sanctions, including jail terms and asset sequestration.

The 15 debtors are among 35 ex-bank owners who owe the government a staggering US$10 billion in debts.

The government injected emergency liquidity support funds into the banks during the banking crisis of the late 1990s. But there have been accusations that the bankers, who include the family and friends of former authoritarian president Soeharto, misused the loans for, among other things, currency speculation and propping up affiliated companies. Most of the banks in question have since been closed down.

The bankers signed agreements with the government in 1998 to repay the debts, but after four years most of them have come to be seen as uncooperative in making their repayments.

The repayment schemes agreed upon in 1998 were divided into three types: Master of Acquisition and Settlement Agreements (MSAA), Master of Refinancing and Notes Issuance Agreements (MRNIA) and Deeds of Indebtedness (APU).

The 15 debtors were among the 26 bankers who signed up to the APU scheme. Nine bankers had previously been summoned by IBRA and had also requested extra time to make verification.

But Paskah said they were merely seeking to buy time.

"The value of the debts were all been agreed upon as between the debtors and the government when they signed the debt settlement agreements, including the MSAAs, MRNIAs and APUs," Paskah said.

Under strong public pressure, the government set up a special team of legal counsel in March to decide which debtors had been uncooperative in repaying their debts.

They categorized the 15 debtors, plus the previous nine bankers, as uncooperative, and recommended IBRA take legal action if they failed to repay their debts within three months from the date of being informed by the agency about their latest debt status.

Another lawmaker from the budget commission, Faisal Baasir, was also of the opinion that there was no need for IBRA to give extra time for further verification.

The legal counsel team is expected to finalize all its review on the debtors who signed MSAAs and MRNIAs sometime this month.

Of the total, the largest debtors in terms of value are bound by MSAAs, with the total debts involved reaching some $8 billion, including the debts owed by the Salim Group, the former owner of Bank Central Asia (BCA); Sjamsul Nursalim (Bank BDNI); Bob Hasan (Bank Umum Nasional) and Sudwidkatmono (Bank Subentra). The last three banks have been shut down.

Their banks were among the largest recipients of the Bank Indonesia emergency liquidity loans with some Rp 144.5 trillion (about $14.2 billion) coming their way at the peak of the 1998 financial crisis.