R&D policy, another debacle for justice
Dadan Wijaksana, The Jakarta Post, Jakarta
The government's controversial decision to effectively exonerate former bank owners from past banking crimes would come at the expense of the people's sense of justice, analysts said.
University of Gadjah Mada economist Sri Adiningsih said the government must fulfill the public's desire to see real justice done by punishing all criminals for their crimes even though they later settled their debts.
"If not, the government in the future, might face lawsuits from the public," Sri told The Jakarta Post on Sunday.
Sri was commenting on last week's decision by the Cabinet to award a "release and discharge" (R&D) regulation for former bank owners deemed partially cooperative in settling their debts.
The former bank owners have been accused of misusing government liquidity support money and having breached the legal lending limit ruling by channeling most of their banks' money to their own business groups, an illegal practice which greatly contributed to the late 1990s financial crisis.
According to Sri, freeing them from criminal charges created a bad precedence.
"A corrupt official or a small-time thief will then justify any crime and refuse criminal charges if they give back their ill-gotten fortunes. How can we accept this?," she said.
State Minister of State Enterprises Laksamana Sukardi said Friday after the Cabinet meeting that the decision to exempt the former bank owners from criminal charges was legal because of existing regulations such as the People's Consultative Assembly (MPR) decree of 2000 which stipulate that the government must be consistent in implementing the initial debt settlement agreements signed between the debtors and the previous government.
Under the debt settlement schemes, debtors who have fulfilled the terms of the agreements must be awarded with the R&D status.
Laksamana argued that the government needed to free the bankers in order to create legal certainty.
Some 35 banks received around Rp 144.5 trillion (currently equal to about US$16 billion) in government loans to help them cope with the massive bank runs during the financial crisis. But according to an audit by the Supreme Audit Agency (BPK) most of the bank owners misused the loans by channeling it to affiliated businesses or used it for speculation against the rupiah.
To resolve the debt problem, the previous government via IBRA, which has been given the mandate to collect the debts of the bankers, entered in 1998 into debt settlement schemes with the ex-bank owners.
The most controversial scheme was the Master of Settlement and Acquisition Agreement (MSAA), which provides the mechanism for the largest debtors in settling their debts.
However, Faisal Basri, an economist at the University of Indonesia, challenged the validity of the agreement, saying it ran counter to existing laws.
"MSAA is a civil agreement. If it intends to put aside criminal charges, then it's legally flawed," Faisal said, adding that based on existing laws, there had to be separation between civil and criminal law.
"So, the so-called R&D should only cover their financial obligations. They should still have to face their criminal charges."
Echoing Faisal's view was economist Drajat Wibowo, who stated that the MSAA was an incomplete legal product since there was no signature from the Attorney General, as required by a clause in the MSAA itself.
"From that point of view, MSAA is legally flawed," Drajat, senior analyst at Institute for Economic Development and Finance (Indef), said.
Aside from all that, the three economists also agreed on the need for the government to verify the value of the assets that the former bankers had surrendered to settle their debt settlement, to minimize the losses to the state.
"A verification is crucial to determine whether the debtors in question had actually fulfilled all the obligations. And as such should be conducted by the government, not IBRA, to minimize any conflicts of interest," Faisal said.