Release and discharge: What about the money?

Riyadi Suparno, The Jakarta Post, Jakarta

Controversy surrounding a debt settlement deal between the government and big debtors has reached new heights, with the recent announcement of the government's plan to release five big debtors from possible criminal charges.

But then, no one has been prepared to sign the letter of release and discharge for the five debtors: Anthony Salim (Bank Central Asia), Sjamsul Nursalim (Bank Dagang National Indonesia), Sudwikatmono (Bank Surya and Subentra), Ibrahim Risjad (Bank RSI) and Samadikun Hartono (Bank Modern).

From inside the Cabinet, everyone has avoided signing the letter, including Attorney General MA Rachman. Through his spokesman, the attorney general has asked President Megawati Soekarnoputri to sign the letter.

All fingers have since pointed to Megawati. No less then Vice President Hamzah Haz, People's Consultative Assembly Speaker Amien Rais and House of Representatives Speaker Akbar Tandjung have all suggested that Megawati sign the letter of release and discharge.

As usual, Megawati has remained silent, sowing confusion among the public as to who will or should sign the letter.

Seemingly to end the controversy, chairman of the Indonesian Bank Restructuring Agency (IBRA) Syafruddin Temenggung said over the weekend that the letter of release and discharge did not need to be signed, as it had already been signed by then finance minister Bambang Subianto, together with then IBRA chairman Glenn M. Yusuf.

The signed letter of release and discharge was conditional, though, in that it would become effective once the debtors had settled their debts.

So, have the debtors really settled their debts?

Temenggung said that IBRA's team of legal advisers had made a thorough evaluation of this issue, and the results would be presented to the Cabinet on Dec. 16.

The Cabinet will once again review the debt settlement agreements involving more than Rp 138 trillion (about US$15.3 billion) in debt owed by the former owners of banks that were liquidated or nationalized.

Although the government will effectively receive about a quarter of that amount, it is likely to declare that these debtors have complied with the Master of Settlement and Acquisition Agreement (MSAA), which contains the release and discharge clause.

If the government goes ahead and declares the debtors have repaid their debts, this would simply invite a public backlash, considering how these debtors have behaved over the past few years.

Sjamsul Nursalim has been referred to several times by government officials as a noncooperative debtor, and even State Minister of National Development Planning Kwik Kian Gie once criticized him for offering the government a debt-ridden empty shrimp pond company in Lampung in settlement of his huge debt.

Anthony Salim did almost the same thing. He pledged assets said to be worth Rp 52.7 trillion to the government, but about a year later, an independent auditor, tasked to appraise the assets, estimated their value at just around Rp 20 trillion. What about the balance? No one has bothered.

Although considered by many as a cooperative debtor, Anthony Salim has been known for his canny moves in buying back his companies, pledged to IBRA, at very low prices.

The obvious examples are transactions involving television company PT Indosiar Visual Mandiri, auto company PT Indomobil Sukses Makmur, oil palm firms under Salim Palm Plantation, and others. Some even speculate that Anthony may have also regained control of his former crown jewel, Bank Central Asia, through Mauritius-based PT Farallon Indonesia (Farindo).

Although the transactions are obvious, no one in the government has bothered to do anything about them. This only raises speculation that backdoor dealings might be taking place between high-ranking officials and those big debtors, as it is common knowledge that these debtors all have friends in high places.

The reluctance among public officials to sign the letter of discharge indicates clearly enough that the problems are waiting to explode.

If things were to go wrong in the future, the next government could demand accountability from these debtors and anyone who signed the letter of discharge. This means that those people could end up in jail.

Even if the current government guarantees that these debtors will not be prosecuted through the letter of release and discharge, the guarantee itself could be disputed in the future, as the release and discharge clause itself has been considered flawed by some legal experts.

The country's legislation clearly differentiates between civil and criminal legal matters. The debt settlement deal, however, mixes the two.

The release and discharge clause was flawed from the outset. The clause is an integral part of the MSAA, which was hastily drawn up in late 1998 by the then B.J. Habibie government with the help of foreign lawyers out of fear that longer delays might prompt the debtors to engage in asset stripping.

These foreign lawyers might not have fully understood Indonesia's legal system, and therefore mixed together civil and criminal aspects of the law.

Civil law cases can be negotiated and resolved via agreements. When two parties are involved in a court battle over a civil matter, for instance, they could resolve their dispute out of court via an agreement, with the case being either dropped or settled.

In a criminal case, however, such an agreement is not available and cannot negate a crime. If a person murders another person, for instance, the murderer must be punished. The crime cannot be erased by an agreement, deal or guarantee from the government that the murderer will not be punished.

Also, in a criminal case, according to legal experts, the public has the right to report any crime to the police, and the police are obliged to process the matter.

Therefore, can an agreement or guarantee from the government for the five debtors erase the public's right to report any criminal act and erase the duty of the police to pursue any criminal act regarding these debtors?

If this release and discharge clause is applied, it would be unfair on thieves who have served jail terms, even though they have returned the money stolen.

The most obvious recent example is the corruption case involving House Speaker Akbar Tandjung. Although he returned the Rp 40 billion (US$4.5 million) in misused funds to the state, his corruption case proceeded and he was even sentenced to three years in jail -- although he has not yet served the jail term as he appealed the decision.

Therefore, as long as the country's legal system remains the same, such a debt settlement deal, which negates criminality, will not work. A crime remains a crime, and this can be pursued in the future.

If the government were to clean up its act, all it would take is for one criminal case to be brought successfully against a big debtor to open a Pandora's box, which could lead to the uncovering of many other possible backdoor dealings between government officials and big debtors.