Megawati issues decree to clear indebted tycoons

Indonesian President Megawati Sukarnoputri has issued a controversial decree which rules out criminal charges against former bank owners who have finally settled their huge debts to the state.

But Megawati, in the decree issued on December 30 but received Thursday, warned that other ex-bankers who fail to repay their debts will be prosecuted.

Megawati instructed financial authorities to issue letters of "release and discharge" for the businessmen who have repaid their debts. The letters will effectively clear the debtors from any criminal liability.

"To those debtors who fail or refuse to settle their obligations to the Indonesian Bank Restructuring Agency (IBRA), firm and concrete legal action shall be taken against them," the decree said.

Megawati, in her New Year's speech, defended the decision to issue the release and discharge letters, saying without urgent action the debt problem could trigger difficulties in "other areas."

She said it was part of a scheme agreed with the International Monetary Fund, which is coordinating a five-billion dollar economic recovery program for Indonesia.

Many quarters have criticized the policy, saying it betrayed the public's sense of justice.

IBRA chairman Syarifuddin Temenggung, quoted by the Kompas daily, said he would propose discharge letters for five former bank owners who have settled their debts to his state agency.

They include IBRA's largest debtor the Salim Group, which had a total debt of 52 trillion rupiah (5.8 billion dollars).

The other four are Ibrahim Risjad of Bank Risjad Salim Internasional, Sudwikatmono of Bank Surya, Liem Hendra of Bank Budi Internasional and The Ning King of Bank Baja Internasional.

Between 1997 and 1999 the central bank extended liquidity assistance to numerous private banks hit by the regional financial crisis.