Release and discharge: What about the money?

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.