March deadline set for IBRA debtors

March deadline set for IBRA debtors

Berni K. Moestafa, The Jakarta Post, Jakarta

Former bank owners have until March 31, to agree to pay off their
debts to the Indonesian Bank Restructuring Agency (IBRA) under
the revised shareholders settlement program, otherwise the
government would take stern measures against them, a government
official said.

Secretary to the Financial Sector Policy Committee (FSPC),
Syafruddin Temengung said on Wednesday that debtors who missed
the March deadline would be categorized as "noncooperative".

"After March 31, IBRA will report to the FSPC and sort out
those who are cooperative and those who are not. Afterwards we
will discuss the steps to be taken in consultation with
institutions like the Attorney General's Office," he told
reporters.

The FSPC groups together senior economic ministers, and is in
charge of IBRA's high profile debt restructuring deals worth over
Rp 1 trillion (about US$96 million)

Syafruddin refused to say the government would immediately
take legal action against noncooperative debtors, but did not
rule out the possibility either.

On Monday, Coordinating Minister for the Economy, Dorodjatun
Kuntjoro-Jakti said the government was mulling over legal steps
to force noncooperative debtors into paying.

Tougher legal measures were being prepared after the FSPC
extended the debt payment period under the shareholder settlement
program to 10 years from four.

The program applies to former bank owners whose banks IBRA
took over after the government bailed them out after the 1997
financial crisis.

To repay the bailout costs, the shareholder settlement program
required the bankers to surrender their assets.

The program also exempted the former bankers from prosecution,
as it turned out that most of the bailout funds were misused.

To date however, most had not begun their debt repayment,
while others simply have refused to surrender their assets by
bogging down negotiations with disputes over the value of the
assets.

IBRA said most debtors deferred payment because four years was
too short a period to cover their debts. The agency argued that a
10-year extension was needed to bring in the debt payments.

But that decision drew criticism from bank analysts who
accused the government of going soft on noncooperative debtors.

"This is a matter of financial restructuring, by stretching
(the payment period) we give them more breathing room,"
Syafruddin continued.

He reiterated that past deals failed to promote repayment in
part because of disputes arising about the value of the assets.

Also, the National Development Program (Propenas), allowed for
a revision of the shareholder settlement program, he said.

"After we have gone through that process, we can get tough
with them," he explained.

Minister Dorodjatun said that new legal measures against the
noncooperative debtors would be discussed next week at the
Cabinet meeting.

The new measures are also part of reform targets under the
fourth Letter of Intent (LoI) to the International Monetary Fund.

"IBRA intends to take more decisive action against
noncooperative debtors....A specific plan to address issues
associated with noncooperating debtors will be finalized by the
end of March 2002," the LoI said.

It says over Rp 50 trillion in loans are in litigation. Of
that amount Rp 13 trillion belong to 49 noncooperating debtors.