IBRA steps up pressure on indebted ex-bank owners

A'an Suryana, The Jakarta Post, Jakarta

The Indonesian Bank Restructuring Agency (IBRA) is stepping up pressure on indebted former bank owners, who have been uncooperative in settling their debts with the government since 1998.

IBRA has given nine ex-bank owners three months to repay debts or risk legal sanctions including imprisonment.

The nine bankers were considered "uncooperative" in repaying their debts based on the findings of a team of legal experts assigned by the government to review the performance of 33 former bank owners in repaying debts. The team has yet to complete its review on all the debtors.

The move by IBRA is seen as a last ditch effort by the government, after previous attempts to force the bankers to repay debts had been unsuccessful.

The former bank owners had received more than Rp 144 trillion in central bank liquidity support funds in the late 1990s. But most of the funds had been misused, several banks had channeled the funds into affiliated firms.

Seven of the nine bankers met with IBRA Chairman Syafruddin Temenggung last week.

They were Ganda Eka Handria from PT Bank Sembada Arthanugraha, Mulianto Tanaga and Hadi Wijaya Tanaga from PT Bank Indotrade, Thee Nin Khong from PT Bank Baja International, Fadel Mohammad from Bank Intan, Liem Hendra from Bank Budi International and Thee Nin King from Bank Danahutama. All of these banks have been shut down.

The former bank owners emerged from the meeting with mixed reactions. Some vowed that they would fulfill their obligations, while others strongly objected to the cited amount of debt owed.

The latter group of the bankers disputed IBRA's version of the bankers' debts, saying that the amount had been inflated by IBRA officials.

Hardjono (eds: one name), a lawyer defending the debtors, said that the difference was as high as 50 percent.

He claimed that the debtors had filed their versions to IBRA on several occasions, but they had been ignored.

"Therefore, we will not pay the debts unless the difference is settled," said another lawyer Hermawan Pamungkas recently, during a television talk show here.

Meanwhile, IBRA dismissed the charges of miscalculation.

Agency legal division director Robertus Bilitea said the recalcitrant debtors had actually agreed on the amount of their debts, as stipulated in an out-of-court settlement agreement (PKPS) with the government in 1998.

"It is quite weird. They had agreed and signed the agreement, but now, they deny it," Robertus told The Jakarta Post on Saturday.

He added that the ex-bank owners should have lodged complaints about the difference in the past.

"However, they failed to do that. They only reacted now, after we decided to carry out tougher measures," said Robertus.

Robertus went on to say that IBRA's version was valid, moreover it was produced by independent parties and professionals, who have carried out a financial audit and due diligence on the banks.

Meanwhile, economist Raden Pardede praised the tough measures planned by IBRA, saying that the move would restore investor confidence to Indonesia.

"This could create a momentum for accelerating IBRA's asset sales, and this could later raise capital inflow to Indonesia, which is badly needed to spur economic growth and to ease the strain on the state budget," Raden told the Post on Saturday.

"People would be happy that the errant bankers are punished for their misconduct in the past, such as transgressing the legal lending limit," he added.