Team readies legal action against bad IBRA debtors

The Jakarta Post, Jakarta

A team of law experts has finalized drawing up plans for legal action against uncooperative debtors, who in part owe the state a total of US$10 billion, in a plan that is now awaiting government approval, a senior official said on Wednesday.

Secretary to the Financial Sector Policy Committee (FSPC) Syafruddin Temenggung, said the team had finalized its plan to tackle bad debtors of the Indonesian Bank Restructuring Agency (IBRA).

"I received feedback from the team, and I think they are ready to report to the FSPC," he told reporters.

The FSPC groups together senior economic ministers and is in charge of IBRA's debt-restructuring deals worth more than Rp 1 trillion ($100 million).

Known as the legal counsel, the team was set up last month to filter out IBRA's uncooperative debtors, and to recommend what legal action should be taken against them.

This could range from travel bans, asset sequestration to jail sentences.

The debtors are bankers charged with misusing around $13 billion in state-funded liquidity loans during the financial crisis in the late 1990s.

In return for not facing criminal charges, the former bankers have agreed to repay their debts, mostly through asset transfers. IBRA must sell the assets to recoup the loans.

However, this scheme has yielded only a minimum payment with most debtors defaulting, and the assets have lost value over time.

As for many debtors, their agreement expires this year, public pressure has been growing for the government to single out the bad ones.

Uncooperative debtors have three months to make good their shortfalls, or risk facing legal action.

The legal counsel consists of two teams. One is in charge of identifying the bad debtors, while the other recommends how to tackle them.

Sitting in the first team, called the legal assistance team, are lawyers Todung Mulya Lubis, and IBRA's head of litigation division Robertus Bilitea.

In the second team, known as the legal assistance direction team, are lawyers Kartini Mulyadi, Luhut Pangaribuan, and officials from the police and the Attorney General's Office.

Syafruddin did not say when the legal counsel's work could be presented before the FSPC.

Key ministers at the FSPC are preparing for next week's Paris Club meeting over talks to reschedule Indonesia's sovereign debts.