Suspension of banks

Minister of Finance Fuad Bawazier announced on April 4, the suspension of seven banks and another seven banks placed under the supervision of the Indonesian Banking Restructuring Agency (IBRA). It was also announced that the liabilities of the first group of banks toward their customers would be taken over by BNI and that BNI would take care of matters pertaining to payment to customers.

The suspended banks will not be liquidated. This means that as limited liability companies, the banks still exist. As a result, the legal consequences are as follows:

1. The banks' shareholders still control all the assets of the banks as limited liability companies -- both fixed assets (such as land and buildings) and movable assets (such as motorized vehicles, computers, etc.). Only the shareholders reserve the right to sell these assets. The government doesn't have the right to sell these assets, let alone sell the personal assets of the shareholders.

2. Manipulation and collusion practices may have been done in that the assets of the banks and the personal assets of the shareholders have been sold (transferred to other parties) before the government, in this case IBRA, can get hold of them. Can the government exercise tight control over this matter and give its assurance that there will be no such practices, including those involving certain IBRA personnel?

3. As for other banks (about 47), which are categorized as financially unsound and under IBRA monitoring, the boards of directors and the shareholders may still have an opportunity to collect the assets and sell them to other parties before the government decides to suspend the banks'.

4. According to civil law, the shareholders of suspended banks assume responsibility for all the banks' liabilities, including the personal assets of the shareholders themselves. However, it may happen that out of slyness, these shareholders transfer the banks' assets as well as their personal assets to other parties. Can such acts be criminally sued? Or, do they belong only to the realm of civil law, which involves a slow process and is easily tricked?

In my opinion, in an effort to restructure the banking system, it is the government which will be most disadvantaged because it will have to bear all the banks' liabilities, especially when the proceeds from the sales of the banks' assets are not sufficient to cover the liabilities, and the personal assets of the shareholders are nowhere to be found.

If the government has to sustain such losses, this means the burden must be borne by the entire Indonesian population (through taxes). Those who enjoy the biggest profit and can afford to laugh are the shareholders of the banks because they have easily pocketed the government's funds through liquidity credits extended to them (their banks) by Bank Indonesia. Those borrowing from the banks are their own cronies.

I don't think the government needs to help banks which are financially unsound and have disadvantaged people. They must be quickly liquidated. Let the shareholders, pursuant to the prevailing laws, assume their responsibilities to customers.

Do not sacrifice the people all the time because they have suffered enough as a result of the monetary crisis brought about by business tycoons, including these financially unsound banks. Unlucky indeed is the fate of the people.

SUHARSONO HADIKUSUMO

Jakarta