During the 1997-1998 Asian financial crisis the government, under then president Soeharto, provided liquidity support through the central bank of

Rp 144.5 trillion to assist 48 commercial banks to cope with massive runs during the monetary crisis, but 95 percent of the money was eventually embezzled.

Rizal said that the debtors lobbied the Soeharto administration, convincing high-ranking officials to allow them to pay back their debts to the state using assets, whose value was constant, rather than cash.

Rizal added that his boss, former president Abdurrahman '€œGus Dur'€ Wahid, deplored the decision, which he said would cause the state massive financial losses, as the value of the assets was decreasing overtime.

'€œTo make sure that the tycoons paid back the same amount as they had borrowed from the state, we issued what we call a personal guarantee notes policy. The policy meant that if the tycoons couldn'€™t pay their debt, then their families, until the third generation, bore the responsibility to pay.

'€œThe policy gave the government strong bargaining positions in the case, but after our administration was over the policy was withdrawn [under Megawati'€™s administration],'€ Rizal explained.

To replace the personal guarantee notes policy, Megawati issued Presidential Decree No. 8/2002, which regulated '€œrelease and discharge'€ letters freeing recipients from the obligation to repay the debts in full. (***)

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