Team to finalize IBRA debt extension plan

Berni K. Moestafa, The Jakarta Post, Jakarta

A small government team will finalize talks over a controversial plan to grant debt payment extensions for large debtors of the Indonesian Bank Restructuring Agency (IBRA), while also reviewing the problems plaguing other IBRA debtors.

Coordinating Minister for the Economy Dorodjatun Kuntjoro- Jakti said President Megawati Soekarnoputri and Vice President Hamzah Haz had agreed on the formation of the team during a Cabinet meeting on Friday.

"This small team will have to review everything, not just the large debtors but also the small ones, the loans for farmers up to the BLBI issue," he said, referring to the Rp 144.5 trillion (about US$13.9 billion) in liquidity support loans (BLBI), of which nearly all are believed to have been misused.

Dorodjatun said the team would be comprised of inter- ministerial officials and was expected to wrap up its work by mid February.

Any conclusions from the team will still be subject to consultation with legislators and approval from the Cabinet, he added.

On the debt extension plan, Dorodjatun said he hoped the team would come up with a solution to the countless futile legal actions against uncooperative debtors.

"We will need the cooperation of the Coordinating Ministry for Security, the Attorney General's Office and the National Police Chief," he explained.

The controversy over the debt extension plan centers on the government offering uncooperative debtors incentives rather than punishment.

People's Consultative Assembly Speaker Amien Rais criticized the government for its insensitive decision,detik.com reported on Friday.

While the public has been burdened again by the raise in fuel prices, the government continues to give debtors leeway to escape payment, Amien said.

Under a new shareholders settlement program, IBRA extended the debt payment period for its debtors to 10 years from four.

It has also effectively lowered the interest rates that debtors must pay, by decoupling them from Bank Indonesia's three month promissory notes, now at some 17 percent.

Under the new program, debtors must pay a minimum interest rate of only nine percent.

The shareholder settlement program applies to former bankers, whose banks the government bailed out from the impact of the 1997 financial crisis.

But a report by the Supreme Audit Agency revealed abuses amounting Rp 138.4 trillion in the use of the bail out funds under the BLBI scheme.

This should have led to the prosecution of the banks' owners, yet the government opted instead for an out of court settlement.

The shareholders settlement program is an umbrella agreement on which are based various debt settlement schemes.

In 1998, five conglomerates agreed to enter the program under one scheme known as the Master of Settlement and Acquisition Agreement (MSAA).

For Bank Dagang Negara Indonesia (BDNI) owner turned MSAA debtor, Sjamsul Nursalim, the deadline for his debt settlement is this year.

He owes the state some Rp 28.4 trillion, but a long deadlock over talks on the term of payment have been stalling the payment process to this point.

"After 3.5 years without a settlement, the question we must ask ourselves, is that of law enforcement," Dorodjatun said.

He said since the shareholder settlement program was using an out of court approach, uncooperative debtors should be brought to court.

But some experts said that past deals like the MSAA were so weak that even if IBRA had a strong case against its debtors, the latter could still claim victory in court.

IBRA chairman I Putu Gede Ary Suta said there were currently 2,400 legal cases against the uncooperative debtors in process.

"The court has issued verdicts on 230 cases; we lost nearly all of them," Ary Suta lamented.

According to the experts, IBRA's position is made worse by the fact that bribery is a common practice at court -- a situation that is often behind the many controversial decisions the Indonesian courts are known for.

"This (IBRA's weak legal power) is everybody's problem," Dorodjatun said.

He has earlier promised tougher legal actions against the uncooperative debtors to accompany the incentives they had received from the revised shareholder settlement program.

Major debtors

(Shareholders -- Bank name -- Amount of debt (in trillion rupiah)): Soedono Salim -- BCA -- 52.73; Usman Admadjaja -- Danamon -- 12.53; Sjamsul Nursalim -- BDNI -- 28.41; Kaharuddin Ongko -- BUN -- 8.35; Mohammad Hasan -- BUN -- 5.34; Samadikun Hartono -- Modern -- 2.66; Hokiarto & Hokianto -- Hokindo -- 0.29.