Mega responsible for IBRA debtors discharge: Hamzah

The Jakarta Post, Jakarta

Vice President Hamzah Haz said on Monday that President Megawati Soekarnoputri may delegate to her ministers the unpopular move of signing papers that would drop criminal charges against bad debtors, yet the final responsibility would still rest with her.

While explaining that the government had to go ahead with the planned dropping of criminal charges against debtors, Hamzah pointed the finger at Megawati as being the one responsible for any such move.

"The signing of the R & D (release and discharge) papers can be carried out by the coordinating minister for the economy or the Attorney General's Office, but the one responsible for this would still be the President," Hamzah told reporters. "Granting an amnesty comes within the prerogative of the President."

The debate over who should sign the release and discharge papers has become the latest controversy surrounding the settlement by ex bankers of their debts to the government.

Having misused around Rp 138 trillion (about US$15.3 billion) in Bank Indonesia emergency liquidity loans as well as violated banking regulations, the ex bankers face prosecution unless they repay the loans that were misused.

This forms part of the deals signed by the ex bankers with the government under the shareholders' settlement program. Initiated in 1998 by the Indonesian Bank Restructuring Agency (IBRA), this program involves 35 bankers whose banks were eventually taken over by IBRA.

But only recently -- as the deadline for many of the debtors nears -- have experts raised doubts about the validity of these agreements.

"According to the law, the settlement of debts comes under the civil law so that a resolution should come under this category. This (the civil law), however, cannot erase criminal aspects if these be found," Hamzah explained, echoing the opinions already voiced by a number of legal experts.

"So, what we must uphold here are legal principles," he added.

Hamzah's remarks have also added to the political undertones of the debate following criticism by People's Consultative Assembly Speaker Amien Rais.

Amien joined in the public outcry against the government last week, urging it to annul the release and discharge mechanisms even if the ex bankers repaid all their debts.

Both Hamzah and Amien are viable contenders for the presidency at the 2004 general elections.

Analysts say that government officials fear a public backlash if they sign the documents letting some of the country's biggest tycoons off the hook, leaving the poor to suffer the consequences of the tycoons' illegal acts.

This year alone, some Rp 59 trillion in taxpayers' money will have been spent on paying interest on the government bonds that were issued to cover part of the loans the bankers misused.

This amount will exceed what the government spends this year on social welfare programs and development projects taken together.

Government officials denied any finger-pointing in their ranks, and said they would come to a decision by early next month.

IBRA has recommended that four bankers be released from the possibility of criminal prosecution saying that the four have been cooperative, meaning that they have settled their debts under the shareholders' settlement program.

But even if the debtors fully comply with the program, the money IBRA will be able to recover from them will be insufficient to cover the initial losses.

Analysts have long suspected that the debtors have made minimal repayments, and surrendered assets only to later buy them back from the agency at heavily discounted prices using third parties.