MSAA doesn't have any legal teeth: Ex-minister

MSAA doesn't have any legal teeth: Ex-minister

The Jakarta Post, Jakarta

Former finance minister Bambang Sudibyo told legislators on
Wednesday that the out-of-court debt settlement agreement signed
in 1998 between former bankers and the government was legally
flawed and there was no reason for the government to proceed with
the policy to soften the debt repayment terms.

He pointed out that the agreement popularly known as the MSAA
(Master Settlement and Acquisition Agreement) or MRA (Master
Refinancing Agreement) are inconsistent with the country's
banking law.

"The MSAA (or MRA) is legally flawed," he said during a
hearing with the House of Representatives' Commission V on
Industry and Trade Affairs over the government's controversial
plans to be lenient on the ex-bankers with debt repayment to the
state.

The government plans to extend the repayment period to 10
years from four, and to lower the interest rate to nine percent.
The new policy is seen as unfair to the millions of poor people
who must suffer from the fuel price hike policy aimed at easing
the pressure on the state budget, heavily burdened by the huge
cost of bailing out the banking sector at the height of the 1997
financial crisis.

The bankers owe the debts after they received around Rp 140
trillion (around US$13 billion) worth of liquidity support funds
from the government to help their banks stay afloat in the wake
of the financial crisis.

A special team of ministers has been assigned to review the
much-criticized policy. It will be completed by the end of next
month.

Bambang opposed the debt repayment extension policy. He said
that the government should instead apply other laws to force the
former bankers to settle their obligation immediately.

"Do not be afraid, we still have other laws other than MSAA.
We cannot let ourselves be fooled any more," he said.

The House is authorized to block government policy as
evidenced in the past when lawmakers canceled key privatization
and asset sales programs including the privatization of cement
giant PT Semen Gresik and the sale of Bank Central Asia (BCA).

Some, however, fear that certain lawmakers might have been
paid off by the former bankers, most of whom can easily afford
it.

According to the MSAA and MRA, the former bankers must repay
their debts to the government by surrendering cash and fixed
assets. The agreement also stipulates that the bankers would not
be charged for crimes committed when most of their banks' money
was channeled to affiliated businesses, thus violating the legal
lending limit regulation. This is part of an out-of-court
settlement.

But the MSAA is inconsistent with the country's banking law,
which stipulates that a violation of the legal lending limit is a
crime.

The ex-bankers including tycoons Sudono Salim, Sjamsul
Nursalim, Bob Hasan, Usman Admadjaja and Hokiarto have so far
declined to repay debts or surrender assets. In some cases, the
assets surrendered were either those which had been pledged to
other creditors or had little market value. According to the
MSAA, the ex-bankers must settle their obligations by the end of
November 2002. The new government policy would give them another
six years to settle their debts.

Separately, Speaker of the People's Consultative Assembly
(MPR) Amien Rais warned the government not to proceed with the
new policy, saying that if the plan were carried out the
Indonesian people would bid farewell to the current
government.

"My worst fear is that the people will say good-by to
the government if it insists on this plan," Amien said in
Denpasar, Bali on Wednesday.

Meanwhile, legal expert Denny Kailimang told The Jakarta Post
that, instead of going soft on bad debtors, the government should
use legal steps against them.

"To this point, those bad debtors have never shown good faith,
and IBRA has given them enough time to settle their obligations.
So, why not go to trial over this?" said Denny, referring to the
Indonesian Bank Restructuring Agency.

He also expressed disagreement over an excuse that the
government could only use civil law once in court.

"The civil law only covers the debt-settlement matters. But if
they are proven to have committed a violation of the contract,
such as refusing to repay debt in the required period of time --
as they are at the moment -- the charges could be tried under the
criminal code."

Another lawyer, Pradjoto also shared a similar opinion, saying
the planned move by the government would once again show that it
was never serious in creating legal certainty.