Victim of Martial Law

PT Inaco claims compensation from the government for two ships taken over by the navy 50 years ago. The court maintains that the decision on insolvency was invalid.

THERE was no name board. The singlestory building in Pasar Minggu, South Jakarta, gave no impression of being a shipping company’s office. At the entrance was a notice reading that an Englishlanguage course was being run there. “The office of PT Inaco is right here,” said Director of Indonesian Navigation Co Ltd (Inaco), Agus Salim, last Thursday.

The shipping firm, set up on October 28, 1950, was once in possession of two large vessels linking Indonesia with several countries. But the company’s heyday ended when it was declared insolvent and the government confiscated both ships. On Friday two weeks ago, the firm again sent a letter to President Susilo Bambang Yudhoyono. Inaco demanded that the government pay compensation for the confiscation of its vessels.

Its judicial journey began in 1957, when the Department of Communications asked Inaco to pay port fees. With the failure of Inaco to carry out its obligation, the Department finally brought the case to trial. The Central Jakarta District Court declared Inaco insolvent. The State Treasury Office started calculating Inaco’s assets...

In the process of assets calculation, according to Agus Salim, the two ships, KM Sawega and KM Baumasepe, were seized by the Indonesian Navy. Navy Chief of Staff, Rear Admiral R. Subijakto, in his letter dated December 4, 1957, stated that the takeover was in the interest of the state, which at that time was under martial law during the war to regain control of West Irian.

This takeover was affirmed by a presidential decree dated January 14, 1960. Signed by President Sukarno, the decree provides that the ships, each weighing 8,000 DWT and bought by Inaco from Hitachi Ship Building & Engineering Co Ltd at the price of US$5.5 million, shall be under government control because of the insolvency of Inaco. The insolvent status led to the confiscation of all assets of Inaco, covering its building, land and cars. Inaco was paralyzed.

Nonetheless, Inaco’s executives, mostly being activists of the Masyumi Party, refused to give up. They took the case to court. In their view, the firm’s insolvency was unlawful.

Inaco’s battle was fruitful. On January 7, 1976, the Central Jakarta court decided in favor of Inaco and cancelled the bankruptcy declaration. “One of the judge’s considerations was that the debt of Inaco to the government only totaled Rp540,000, while its assets were over Rp17.8 million,” said Agus Salim.

But the court decision is not the only basis of Inaco’s claim for compensation. In 1960, said Salim, the navy was already prepared to pay for it. At that time, Inaco proposed Rp280 million in compensation. “It’s an estimate of the price of ships and the income from their operation,” added Salim. Yet there was no followup consensus because the navy deemed this demand too high. “The navy wanted the service of appraisers.”

With the changing regimes and presidents, Inaco continued to fight for its right. In the New Order era, Inaco sent its letter to the Minister of Justice, seeking government compensation. Likewise, the attempt still failed. The same was done in the terms of presidents Habibie, Abdurrahman Wahid, Megawati, and Susilo Bambang Yudhoyono. Besides the presidential institution and the Department of Finance, targets of Inaco’s appeal were also the National Human Rights Commission, the National Ombudsman, and the House of Representatives. These organizations were expected to pressure the government to follow up the claim.

To President Yudhoyono, Inaco even sent two letters. The first was delivered on January 30, 2006, and the second on August 3, 2007. “We insist on the payment of compensation,” urged Salim. Its value is certainly different from the demand 37 years ago. “By calculating the ships’ value and investment cost plus interest, we claim Rp4 trillion,” indicated Agus Salim. The sum, he said, was derived from detailed estimation. “The corporate finance division calculated the value and investment cost of the ships as well as interest from their takeover until today,” he claimed, adding, “if the government can’t pay the whole sum, we can negotiate.”

SecretaryGeneral of the Finance Department, Mulia Nasution, acknowledged the receipt of a letter on the “two Inaco vessels.” “It was then being studied by the legal affairs bureau,” said Nasution as Tempo sought confirmation of Inaco’s letter sent in 2005. “Now I have no idea of the developments. I need to check it first,” added the former directorgeneral of state treasury of the Finance Department.

Finance Department spokesman Samsuar Said stated that he was not informed of PT Inaco’s claim. According to him, if the Finance Department is supposed to process the case, it will first discuss it with the Defense Department and the Communications Department to understand the matter. “Only after that will it be handled by the Finance Department,” he said. In his opinion, if the ships were seized in a period of martial law, there is no compensation. “A time of war is like a natural disaster, which belongs to force majeure,” noted Samsuar. Minister of Defense Juwono Sudarsono, asked by Tempo on a separate occasion, could not confirm the case. “I haven’t been informed of it,” said Juwono.

Lecturer of civil law at the School of Law, University of Indonesia, Rosa Agustina Pangaribuan, said every citizen whose right is violated could indeed file a lawsuit to claim compensation. In a case such as this one, added Rosa, Inaco should be able to prove that the takeover of its vessels had no clear legal basis.

With regard to compensation, Rosa said it was relative. In a civil suit the demand for compensation should be concretely founded. In this case Inaco did the right thing by calculating the price and investment of ships, interest and so forth. “The final word depends on the judge’s evaluation,” concluded Rosa.

Apart from the two ships, after the insolvency decision in 1957, Inaco also lost a lot of assets. “Demanding the return of assets is a tougher job,” admitted Agus Salim. He said he was no longer in possession of complete documents of Inaco’s assets. ”Their records are scattered.”

The insolvency verdict has in fact made Inaco really bankrupt. With dozens of shareholders in the past, only 14 are now left. The firm’s business areas remain trade, services and transportation. “But its main task is today to claim compensation for the two vessels,” stressed Salim. The other executives, besides opening an Englishlanguage course, also trade in shipping equipment.

So far Inaco has not yet attempted to sue the government to try to force it to pay compensation. Inaco, according to Agus Salim, considers the government already prepared to compensate for the loss. “But the proper amount is not yet fixed.” In his belief, the government can afford the pay the sum claimed by Inaco. “There’s no way of saying that the money is lacking, while a lot more funds have gone by way of corruption,” he remarked.

Abdul Manan, Fanny Febriana

Tempo Magazine, No. 51/VII/August 21 - 27, 2007


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