Legal action to be taken against closed bank owners

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)