Fri, 19 Mar 1999

Legislators seek probe on bad debts

JAKARTA (JP): The monetary authority must take to court the management of state banks suspected of violating banking rules and bad debtors who inflicted huge losses on state banks, a legislator from the ruling Golkar said on Wednesday.

Thomas Suyatno said bad bankers and debtors at state banks had been partly responsible for the country's current economic crisis.

"The government has to be fair," he said on the sidelines of a hearing of the House of Representatives Commission VIII for finance and the state budget.

Thomas said he had a list of the country's 50 largest debtors at state banks, with the largest debt owed by a single debtor totaling Rp 8.7 trillion (US$983 million) while the "smallest" debt reached Rp 1.4 trillion.

He said he would ask his fellow legislators to push for legal action against those causing the huge amount of bad debts at state banks.

"If the government bars errant bankers from traveling out of the country, these people (debtors) have to be included as well."

Asked to comment on this, Bank Indonesia Governor Sjahril Sabirin also vowed to take to court those suspected of breaching banking regulations at state banks.

He said the authorities would bring to court the management and owners of the 38 private banks closed by the government last week who were suspected of violating banking regulations.

He also said the central bank would draw up a list of errant bankers to be barred from leaving the country.

Thomas was chief commissioner of Bank Aspac and a commissioner at Bank Uppindo. The two banks were among the 38 banks closed by the government last week.

Thomas denied a report that he and his family had left the country to avoid investigations for possible wrongdoings.

"I am an Indonesian citizen and will never leave this beloved country," he said.

"I have never breached any bank regulation during my 30 years in the industry," he added.

Following the closure of Bank Aspac, its staff held a demonstration demanding compensation from the bank's owners in addition to the government's severance package.

Employees at other closed banks also have held similar demonstrations, making it impossible for depositors at closed banks to withdraw their deposits, which are guaranteed by the government.

The Indonesian Bank Restructuring Agency (IBRA) demanded several bank owners meet with their employees to discuss their demands.

Thomas, however, lambasted IBRA for failing to act firmly in dealing with the problem.

He said bank owners, management and commissioners were barred from entering the closed banks according to the agency's March 13 letter.

He said the letter effectively put the closed banks in the hands of the agency.

"So it is IBRA which has to take the responsibility. If the bank employees are creating difficulties, the agency must act according to new banking regulations which classify such actions as crimes."

"Will IBRA dare to act accordingly," he asked?

Legislators Paskah Suzeta, also from the Golkar faction, and Uray Faisal Hamid from the United Development Party faction urged the government to provide bridging finance to settle severance payments to employees of the closed banks.

"To reduce tensions, the government should advance the payments for the severance compensations. Don't let these jobless people suffer," Faisal added.

The government launched major bank restructuring measures on March 13, including closing 38 banks, taking over seven banks and identifying nine banks which would be recapitalized.

Sjahril reiterated late Tuesday that owners of the nine banks to be recapitalized had committed to raising 20 percent of the recapitalization funding before the April 21 deadline. Under the program, the government will provide the other 80 percent of the recapitalization funding.

Banks which cannot raise their 20 percent of the funding by the deadline will be closed down. (rei)