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(Left-Right) Principal Applicant Ari Budiman and Muafrizal was accompanied by their Attorney Refly Harun and Maheswara Prambandono delivered the petition arguments at judicial review on Act of the Indonesian Deposit Insurance Corporation (Lembaga Penjamin Sosial –LPS) on Tuesday (5/5) at Panel Session Room, the Constitutional Court Building. Photo PR/Ganie

 

 

The Indonesian Deposit Insurance Corporation (Lembaga Penjamin Sosial –LPS) was presented by acting executive director of LPS Fauzi Ichsan sued three articles on Act of the Indonesian Deposit Insurance Corporation (Lembaga Penjamin Sosial –LPS). Refly Harun as Applicant’s Attorney presented at the first session of case No. 53/PUU-XIII/2015 which held on Tuesday (5/5) at Panel Session Room, the Constitutional Court Building. Refly delivered that basically the Applicant requested that the LPS had legal umbrella for selling 100% share of banks which failed to be saved by the LPS 

In front of Justice Panel led by Constitutional Justice Maria Farida Indarti, the Applicant represented by their Attorney delivered the petition point followed with its petitum. Refly stated that his party sued the provision on Article 30 (1), Article 38 (1), Article 42 (1) Act of the Indonesian Deposit Insurance Corporation. All of the articles regulated that the LPS obliged to sell the share possessed by fail banks.

The three articles a quo were stated as followed:

Article 30

(1)  The Indonesian Deposit Insurance Corporation shall sell the share of failed banks’ within 2 years since the submission as stipulated in Article 25 (LPS wajib menjual saham bank yang diselamatkan dalam jangka waktu paling lama 2 (dua) tahun sejak penyerahan sebagaimana dimaksud dalam Pasal 25)

Article 38

(1)  The Indonesian Deposit Insurance Corporation shall sell the entire share of maintaining banks within 3 years since the submission as stipulated in Article 34 letter a (LPS wajib menjual seluruh saham bank dalam penanganan paling lama 3 (tiga) tahun sejak penyerahan sebagaimana dimaksud dalam Pasal 34 huruf a)

Article 42

(1)  The Indonesian Deposit Insurance Corporation shall sell the entire share of maintaining banks within 3 years since the maintenance of failed banks as stipulated in Article 39 (LPS wajib menjual seluruh saham bank dalam penanganan paling lama 3 (tiga) tahun sejak dimulainya penanganan Bank Gagal sebagaimana dimaksud dalam Pasal 39) 

 

According to the Applicant, all of the articles above didn’t provide legal certainty because the definition of phrase ‘entire share of banks’ (“seluruh saham bank”) wasn’t included in the article elucidation.

Moreover, the Applicant also stated that phrase was defined vary. The first meaning of phrase "entire share of banks" could mean the entire share of banks owned by the LPS. Second, the phrase could also be interpreted as the entire shares owned by the LPS and existing shareholders, including the existing shareholders who bought the bank share in capital markets. With such uncertainty, the LPS felt hampered in carrying out its duties and authorities to sell the share of rescued banks as well as the shares of banks maintained by the LPS.

"In performing the duties, functions and authority as instructed, and obliged by Act of the Indonesian Deposit Insurance Corporation, the LPS suffers a dilemma with those three articles," said Refly in front of Justice Panel consisted of Wahiduddin Adams and Manaham MP Sitompul.

Refly also outlined the reasons of doubt suffered by the LPS. In the implementation, the LPS controlled the majority share of failed banks up to 99 percent more when the LPS was taking over failed banks. By the number of shares controlled, the LPS confused on the duty of sold entire failed banks’ shares which held by the LPS only, or entire small amount of public-owned shares which acquired via stock exchange.

In fact, the LPS had its own understanding towards the phrase "entire share of banks" in the articles reviewed. The LPS viewed that the entire share supposed to be sold by them. It was because, the provision was noted on the Act which stated the return of share which sold was should be optimal. Moreover, the LPS was also required to conduct recovery as much as the amount of temporary equity participation.

“For example, in the Century Bank case amounted 6,7 trillion Rupiahs, it is sold 6,7 trillion Rupiahs if possible. However if it can’t, (it sold) after two years. After two years, whatever the biggest deal (it can be sold). It is now in progress, once more there is little obstacle with the 0.11 of percentage, whether or not it is legal to be sold. By this forum, the LPS requested the interpretation of articles above,” explained Refly.

Based on these arguments, Applicant requested in the petitum to declare the three articles reviewed contrary to the Constitution and conditionally unconstitutional. The term was when the word ‘entire’ in the phrase ‘entire share of bank’ on the three aforementioned articles was not interpreted as the LPS could sell entire share of rescued bank or maintaining bank, whether the share owned by the LPS as the impact of temporary equity participation or the share owned by existing shareholders who buy the share in capital markets, so the Applicant requested to be declared contrary to the Constitution. In other words, the Applicant requested the entire of its own share, including the small amount share belonging to shareholders can be legally sold by the LPS.

Justices advice

After hearing the explanation, Justice Panel gave advices for petition revision. Constitutional Justice Maria Farida Indrati who led the panel advised to the Applicant to revise the petitium editorial. Maria argued the petitum was too long. It was feared that the Court would be positive legislator due to it.

"In the part c, you could just say it have no legal binding. But because you say conditionally unconstitutional then it have to interpret on its own, but then the meaning (shall) the LPS sell the entire share of rescued bank and maintaining bank, whether the share owned by LPS or owned by existing shareholders. It is including the existing shareholders which hold share in capital markets. Can you summarize? Because it later the Court’s verdict will be like the Court set the Act in its own," said Maria.

Before closing the session, Maria reminded that the revision could be submitted not later than 14 workdays. If it didn’t submit, the Court would considered the initial petition as the formal petition. (Yusti Nurul Agustin/Prasetyo Adi N.)

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