Legal Mafia Exploits Insolvency Cases for Personal Gain

KOMPAS/KOMPAS/NORBERTUS ARYA DWIANGGA MARTIAR

Coordinating Political, Legal and Security Affairs Minister Mahfud MD

Coordinating Political, Legal and Security Affairs Minister Mahfud MD says that bankruptcy decisions by the Supreme Court, such as in the case of the Intidana lending cooperative (KSP), have occurred in a number of regions in Indonesia.

JAKARTA, KOMPAS – The recently revealed alleged bribery case implicating Sudrajad Dimyati, a nonactive civil chamber judge of the Supreme Court relating to the insolvency ruling in the Intidana lending cooperative case, is believed to be the tip of the iceberg in such crimes among the judicial mafia. Political, Legal and Security Affairs Coordinating Minister Mahfud MD has said more judges will become suspects in similar cases in the near future.

The uncovering of Intidana bribery case by the Corruption Eradication Commission (KPK) is seen as headway into dismantling the judicial mafia practices, as well as a calls for reform of the judicial system.

The crime is perpetrated with the cooperative insolvency being filed by a clique of members, while in fact it is financially healthy with assets of hundreds of billions of rupiah as demonstrated, he said, by Intidana.

In an interview with Kompas daily on Friday (30/9/2022), Mahfud said that bribery-ridden insolvency rulings, such as in the Intidana case, occurred in other regions based on dozens of reports submitted to his office. The crime is perpetrated with the cooperative insolvency being filed by a clique of members, while in fact it is financially healthy with assets of hundreds of billions of rupiah as demonstrated, he said, by Intidana.

In the case of Intidana, the membership clique, which was reported to have built up assets of around Rp 50 billion, filed an appeal at the cassation level for cooperative insolvency. The Supreme Court granted the civil suit and declared the cooperative insolvent. Mahfud said the decision was a legal infringement because the “insolvency” term was only liable for corporate entities such as limited companies. As membership-based organizations, he said, lending cooperatives were not eligible for insolvency rulings by the court.

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He asserted the cases were rife in Bandung and Bogor, West Java. Another case of an insolvency ruling occurred with KSP Indosurya in Jakarta. On 11 August, through decision No. 15/2022 on homologation cancellation, the Central Jakarta District Court decided KSP Indosurya was bankrupt.

KOMPAS/RONY ARIYANTO NUGROHO

Supreme Court Justice Sudrajad Dimyati wears a prison vest after undergoing an examination at the Corruption Eradication Commission (KPK), Jakarta, on Friday (23/9/2022).

Mahfud said the lawsuit for KSP Intidana insolvency had fallen through eight times in the lower courts before it was finally granted by the Supreme Court.

"[You may] note it, later there will be another judge announced [as a suspect in Intidana case]. Many are involved, including [non magisterial] employees. I have tracked them," Mahfud said.

When asked about another judge possibly being named a bribery suspect in the Intidana case, KPK deputy chairman Nurul Ghufron refused to confirm. He only said investigators were still developing the case.

Coordination work

In addition to KSP Intidana, the task force assigned with handling troubled cooperatives has since early this year been given the mandate to oversee the settlement process (homologation) over the suspension of debt payment obligations (PKPU) for KSP Sejahtera Bersama, KSP Indosurya, KSP Pracico Inti Sejahtera, KSP Pracico Inti Utama, Koperasi Jasa Wahana Berkah Sentosa, KSP Lima Garuda, and KSP Timur Pratama Indonesia. It is estimated that the total funds to be disbursed are around Rp 26 trillion.

Cooperatives and Small and Medium Enterprises Minister Teten Masduki hosted a meeting in March, attended by Mahfud, then-minister of agrarian and spatial planning/head of the National Land Agency, Sofyan Djalil, and Supreme Court chairman Muhammad Syarifuddin. The meeting shed light on the substance of Law 37/2004 concerning insolvency and the suspension of debt payment obligations, particularly related to the legal protection for cooperative members as mandated in the law.

KOMPAS/WISNU WIDIANTORO

Cooperatives and Small and Medium Enterprises Minister Teten Masduki

Teten asked the Supreme Court to heighten its supervision over the Commercial Courts in the hope that the judges would adopt prudence so as to not so easily cede to a petition for the suspension of debt payment obligation or insolvency filed by cooperatives. His appeal for prudence was reasonable given the fact that the law allows insolvency petitions filed by a minimum of two applicants while a cooperative’s membership may reach hundreds of thousands.

“The judges of the Commercial Court must be careful in assessing whether the application for the suspension of debt payment obligation deserves assent, let alone the petition for insolvency. The fate of hundreds of thousands of other cooperative members must be taken into consideration. The Cooperatives and SMEs Ministry has written to the Supreme Court for legal protection [for Commercial Courts judges]," he said.

Supreme Court chairman Muhammad Syarifuddin said his institution would provide educational guidance further for Commercial Court judges in dealing with cooperative petitions. "We have received the letter from the Cooperatives and SMEs Minister, and it is our concern to educate Commercial Court judges regarding this matter," he said.

Impetus for reform

Gadjah Mada University’s Center for Anti-Corruption Studies researcher Zaenur Rohman believed transactional exchanges in insolvency cases had existed for a long time. While the transaction, which appeared to have been perpetrated in an insolvency case on a cooperative, was uncovered only recently, he said, it was possible that such practices had been rife for longer.

"Hardly any types of cases are free from transactional practices. Insolvency is related to the handling of property. Therefore, those harboring [personal] interest in insolvency cases have motives to help in winning the case when the offer [of a kickback] comes to him. That makes [transactions] happen," he said.

Zaenur expressed his hope that the KPK would look into the Intidana case deeper for possible involvement of other judges and perpetrators. The KPK was urged to expand the investigation to other cases possibly handled by either the same perpetrators or different panels of judges.

KOMPAS/WAWAN H PRABOWO

Residents pass in front of the Red and White Building of the Corruption Eradication Commission (KPK) Kuningan, Jakarta, on Monday (6/7/2020).

He said the KPK could screen the other decisions on cooperative insolvency cases and seek their relationship with the case applicants and the composition of the judge panels. The KPK, he said, could also collect additional information on the possibility of other cases smacking of transactional practices.

"Case development may be carried out [by grilling] the mafia clique that have become suspects, be they civil employees of the Supreme Court or supreme judges. Usually, a perpetrator does not commit a crime once, such as in case transactions. It is highly likely they are involved in other civil cases, apart from insolvencies," he said.

He referred to the Centre for Financial Transaction Reports and Analysis that the KPK could cooperate with in investigation by studying the flow of funds to those in the Supreme Court.

With the court's decisions being handed down by a panel of judges, he said, the KPK would need to look into the possibility of other members of the judge panel having been involved in the case. He referred to the Centre for Financial Transaction Reports and Analysis that the KPK could cooperate with in investigation by studying the flow of funds to those in the Supreme Court.

Zenur called for the government to be serious in dealing with the problem of the legal mafia and use the case brokerage disclosure in the Supreme Court as an impetus for administering improvements in the judicial system. However, he said, the government’s efforts should not touch the judicial realm, because that was within the domain of judicial authorities where the government could not intervene.

The government, he added, could play its part by handling the Supreme Court’s employees because they were civil servants. (DEA/ANA/MDN/SYA/OSA)

(This article was translated by Musthofid).