Legal action to be taken against closed bank owners

JAKARTA (JP): Attorney General Marzuki Darusman said on Monday his office would immediately take legal action against the owners of four banks closed down by the government last year.

Marzuki said the door for further negotiations was closed because the bank owners had been uncooperative in settling their obligations to the government.

"We will take legal action immediately ... There will be no more negotiations with them," he told reporters following a meeting with Coordinating Minister for the Economy, Finance and Industry Kwik Kian Gie and senior officials of the Indonesian Bank Restructuring Agency (IBRA).

He said IBRA had just handed over the complete documents of the case to the Attorney General's Office.

The transfer of the case of the recalcitrant bank owners is part of an agreement between the government and the International Monetary Fund (IMF) which was to have been completed by the end of the last month.

Marzuki said that the banks were Bank Aspac, Bank Central Dagang, Bank Dewa Rutji and Bank Orient.

IBRA, a unit of the finance ministry, handed the case over to the Attorney General's Office earlier this month.

The four banks are part of 39 banks closed down by the agency last year due to various reasons, including a violation of banking rulings and the inability of their owners to provide the necessary capital to help finance the recapitalization cost of the banks.

But prior to the liquidation measure, the banks received massive liquidity support via Bank Indonesia between 1998 and 1999 to bail out the banks amid plunging confidence in the industry.

The owners of the banks which violated banking rulings, including the legal lending limit regulation, must repay the liquidity support.

Many banks in the country violated the legal lending limit by channeling most of their money to affiliated business groups.

IBRA has said that Bank Aspac, Bank Central Dagang, Bank Orient and Bank Dewa Rutji had a combined debt of Rp 4.67 trillion (US$516 million).

The agency also said that the owners of the 25 banks had agreed to settle their combined debt of Rp 10.5 trillion by surrendering various forms of assets, including shares in companies.

IBRA said that the owners of three banks had agreed to repay their debts in cash, while the owner of seven banks had no obligation under the agency's shareholders settlement program because the banks had not violated any banking rulings.

Marzuki also said that his office had completed the schedule to take legal action against the owners of another group of four banks which were also closed down by the government in 1998.

"We will submit the schedule tomorrow (Tuesday) to Kwik's office," he said.

The four banks are Bank Deka, Bank Istimarat, Bank Centris and Bank Pelita.

The owners of the four banks, which also violated the legal lending limit, were also uncooperative in settling their obligations to the government. The banks additionally received massive liquidity support. (rei)