They are part of a task force set up by President “Jokowi” Widodo this month to collect outstanding payments from borrowers of the Bank Indonesia liquidity support (BLBI) loan facility, which was offered to ailing banks during the 1998 Asian financial crisis.

While some have paid back their loan, 48 borrowers still owe the government Rp 110 trillion ($7.8 billion). Now, 23 years later, the government has decided to collect the money, by force if necessary, by repossessing the assets the debtors had pledged at the time as collateral.

Could an all-powerful debt collector team do the job when other means have been tried before and failed for more two decades? How is this going to be any different from past efforts?

The real difference, and the key to a successful campaign, is that now there seems to be a greater political will to go after these politically connected debtors — or at least to make them pay. And with the government highly pressed for money to cover its mounting deficit, there is greater urgency.

Two successive presidents — Susilo Bambang Yudhoyono in 2004-2014 and Jokowi since 2014 — tried to repossess the money by claiming there had been an element of corruption in the way the loans had been disbursed in 1998, and later in 2004 when the Indonesian Bank Restructuring Agency (BPPN) cleared the debtors of further obligations to repay.

The case was referred to the Corruption Eradication Commission (KPK), which has struggled to find evidence of corruption. In 2018, KPK appeared to be making progress when the Jakarta Corruption Court found BPPN chief Syafruddin Temenggung guilty of clearing the debts of tycoon Sjamsul Nursalim, who received nearly Rp 4.6 trillion in liquidity credit. The verdict, and the 15-year prison term, would have paved the way for the KPK to go after Sjamsul and other debtors.

But the campaign collapsed last year when the Supreme Court overturned the verdict and acquitted Syafruddin of all corruption charges. The KPK dropped its case against Sjamsul last month.

The new approach, by creating the debt-collecting team, follows the simple logic of any commercial loan transaction: If you default on your payment, the creditor has the right to reclaim the money by cashing in on your collateral.

But if this was so simple, why hasn’t this approach been tried before?

“Because we are in charge now,” Mahfud said.

Back in 1998, the debtors pledged assets equivalent to the value of their loans as collateral. The debt-collecting task force will now hunt down these assets, which include property, corporate shares and deposit accounts in foreign banks. Mahfud conceded that with the passage of time, some have probably vanished or changed ownership.

Mahfud said the government would not hesitate to use force in reclaiming the assets and was prepared to contest its case in a civilian court, where the burden of proof would fall on the debtors. He also did not rule out pressing criminal charges against those who resist.

The absence of a sequestration law in Indonesia, however, could be problematic for the government in justifying, before a civil court, the use of force to repossess assets.

This would have been a powerful piece of legislation that Indonesia could have used in going after the wealth former president Soeharto, his children and cronies amassed during his three-decade reign. The Philippine government used its sequestration law to repossess some of the wealth of the equally corrupt former president Ferdinand Marcos.

Instead, Indonesia tried the same approach of pinning corruption charges against Soeharto, but then failed when the court ruled that the former strongman was too ill to stand trial. With this, his children and cronies walked away scot-free.

Understandably, in the absence of political will among the new rulers of post-Soeharto Indonesia, the sequestration law proposal never made it to the House of Representatives.

The new approach — of treating default repayments as a civil rather than a criminal case — may be more palatable for the debtors, many of whom have actually recovered their businesses, reclaimed their glory days and are in a much better position to repay their loans than they were two decades ago. And at least they would not be publicly shamed of being branded a corruption convict, or even being suspected of corruption, and would not have to serve time in jail.

There is another incentive to close the BLBI legal cases once and for all. The cases have lingered for too long in the KPK that they have become a favorite political weapon to attack any government for its failure to tackle massive corruption cases.

The main target is the Indonesian Democratic Party of Struggle (PDI-P), whose chair, Megawati Soekarnoputri, was president when the government issued the release and discharge letters clearing the debtors of further obligations to pay. And Jokowi is a member of the party.

With the new political will and the high-powered debt-collecting team, the outstanding Rp 110 trillion may not be that elusive after all. Jokowi has given the team two years to do the job.

***

Senior editor of The Jakarta Post

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