Stubborn prosecutors

Stubborn prosecutors

The stubbornness of the Attorney General's Office (AGO) in its
attempts over the past month to take back Rp 546.5 billion
(US$64.3 million) -- related to the Bank Bali corruption case --
from the Indonesian Bank Restructuring Agency (IBRA) is a snub to
the government and confounds lawyers.

AGO has argued -- against the legal opinion of almost all
other lawyers -- that as executor of the Supreme Court's decision
it is "legally bound" to claim the money from IBRA and return it
to PT Era Giat Prima, after chairman Djoko S. Tjandra had been
acquitted by the Supreme Court of any charges of corruption.

The top prosecutors' threat -- to charge IBRA with corruption
if it fails to return the funds to AGO -- is raising suspicions
as to why state attorneys are suddenly so determined to enforce
(what they claim in this case to be) the letter of the law.

This idealistic law enforcement is a striking contrast to the
AGO's utterly poor performance in prosecuting other corruption
suspects, such as Prajogo Pangestu and Hardiyanti (Tutut) Rukmana
-- the eldest daughter of former president Soeharto. Miserably,
AGO even failed recently to execute the Supreme Courts's four-
year jail sentence for former banker Samadikun Hartono.
Samadikun's whereabouts are currently unknown.

The Bank Bali scandal exploded in mid-1999 during a due
diligence by Standard Chartered Bank, who was at that time
interested in buying 20 percent of Bank Bali's shares.

The investigative audit discovered that Bank Bali's majority
owner Rudy Ramli had transferred Rp 546.5 billion to Era Giat
Prima. This was used as a fee to enable the politically-
influential broker to get Bank Bali's inter-bank claims paid by
IBRA -- which is the manager of the government's blanket
guarantee on bank deposits and claims.

However, a subsequent special audit by PricewaterhouseCoopers
and another special investigation by the House of Representatives
found that the transaction between Bank Bali and Era Giat Prima
had been legally defective from the outset, because the company
had not made any payment to take over the bank's claims.

Moreover, as the debtor was IBRA (meaning the government),
Bank Bali did not require the service of any other party to
collect its claims. Likewise, if Bank Bali was not able to
collect the money, the claims did not meet the requirements for
reimbursement. No other party would have been able to make the
claims viable for payment, unless they colluded with IBRA or Bank
Indonesia -- which was in charge of verifying the validity of
such claims.

The investigations also uncovered that after Era Giat Prima
learned its dealings with Bank Bali had aroused government
suspicion, the company restored the right to collect the bank's
claims to Bank Bali in March, 1999. Hence, it was Bank Bali and
not Era Giat Prima that collected and received the payment for
the claims from IBRA.

This evidence clearly proves that -- even though Rp 546.5
billion was seized -- the money was not connected to the
corruption case against Djoko Tjandra, particularly since IBRA
(as the debtor) had already annulled the Bank Bali-Era Giat Prima
deal in October, 1999.

Set against this legal background, the AGO's dogged
determination -- to seize back the money from IBRA -- is highly
questionable.

Although, In hindsight, this stubbornness could reflect the
frustrations of top prosecutors, because their cases against main
defendants in the Bank Bali scandal -- Djoko Tjandra, Rudy Ramli,
IBRA former executive Pande Lubis and former central bank
governor Sjahril Sabirin -- were all defeated in court.

But, for AGO to snub the government with such an irrational
demand is playing a very dangerous game. Especially, in regards
to the establishment of legal certainty and the viability of the
banking industry in general.

Seizing back the money from IBRA would endanger the solvency
of Bank Permata -- which was set up in 2001 merged from several
nationalized banks, including Bank Bali. This bank was
recapitalized by the government with Rp 10.5 trillion in bonds
and Rp 1.16 trillion in cash. The Rp 546.5 billion -- which AGO
has claimed to be a legal evidence in Djoko Tjandra's corruption
case -- formed part of the cash injection.

President Megawati Soekarnoputri should intervene in
resolving, once and for all, the legal tug of war between AGO and
IBRA. Allowing these insensible debates to drag on could destroy
the public's confidence in Bank Permata, now the country's
seventh largest bank.