Fri, 03 Jan 2003

NGOs protest release and discharge policy

The Jakarta Post, Jakarta

A number of non-governmental organizations (NGOs) launched a campaign on Thursday against the much-criticized government policy of exonerating some former bank owners from their past banking crimes.

Led by Teten Masduki of the Indonesian Corruption Watch (ICW), a group of NGO officials collected signatures from professionals working in the Jakarta Stock Exchange building in a bid to drum up public support to pressure the government to drop the controversial policy.

Teten said similar campaigns would be launched in other areas of the country.

He said that once sufficient public support was drummed up, the NGOs would file a class action suit against the government if it continued to refuse to reverse its "release and discharge" policy.

Teten said exonerating the former bank owners from their crimes would be a serious blow to justice.

He added that over the past four years, none of the ex-bank owners had been cooperative in settling their obligations.

Under the release and discharge policy, ex-bank owners deemed cooperative in settling their debts to the government will have all criminal charges against them dropped.

The former bank owners owe huge debts to the government after their banks received about Rp 144.5 trillion in state funds to help them stay afloat during the late-1990s financial crisis.

The bank owners, however, were found to have misused most of the state funds. They also stand accused of violating the bank legal lending limit by channeling most of their banks' money to affiliated businesses. This illegal activity is seen as one of the causes of the financial crisis.

Four years ago, the previous government signed debt settlement agreements with some 35 former bank owners, under which they would have all criminal charges against them dropped if they fully repaid their debts.

By the time the agreements expired late last year, none of the former bank owners had fully settled their debts.

Some of the ex-bank owners surrendered fixed assets to repay their debts, but the value of these assets has been greatly reduced due to asset deterioration.

If the government fails to force the ex-bankers to surrender additional assets, tax payers will have to shoulder more of the cost of the financial crisis.

According to reports on Thursday, President Megawati Soekarnoputri has issued a presidential directive on the release and discharge status of some ex-bankers. No details were given as to which bankers would be granted the status.

Earlier, the Indonesian Bank Restructuring Agency (IBRA), which is mandated to collect the debts, proposed five ex-bank owners to be categorized as cooperative debtors. Of the five, the most prominent is Sudono Salim, the founder and former owner of Bank BCA and the largest debtor.

Under the new policy, the debtors would be given until June 2003 to repay their debts in full.

Antara news agency quoted IBRA chairman Syafruddin Temenggung as saying the presidential directive would be made public on Jan. 6, 2003.

In defending the policy, Megawati has said the release and discharge policy was part of a scheme agreed to with the International Monetary Fund, and was in line with guidelines issued by the People's Consultative Assembly.

She said that after four years of stalemate, a decision must be immediately taken to resolve the debt problem to prevent it from becoming even more complicated.

The President also warned that uncooperative debtors would face legal sanction.