House urges FSPC to stop meddling in IBRA's work<\/p>\n
JAKARTA (JP): The House of Representatives' Commission IX on
\nbanking and the state budget said on Tuesday that the powerful
\nFinancial Sector Policy Committee (FSPC) must cease its direct
\nintervention into the corporate and bank restructuring processes
\nundertaken by the Indonesian Bank Restructuring Agency (IBRA).<\/p>\n
The commission said that the FSPC must focus on its role of
\nissuing policy guidelines for the restructuring program in line
\nwith the presidential decree establishing the committee, rather
\nthan making executive decisions.<\/p>\n
It added that the FSPC's supervisory role should be
\nsurrendered to IBRA's oversight committee.<\/p>\n
The recommendation was contained in the commission's five-
\npoint conclusion made at the end of a hearing with the finance
\nministry, IBRA and Bank Indonesia. The finance ministry agreed to
\naccept the conclusion.<\/p>\n
The FSPC groups several senior economic ministers led by
\nCoordinating Minister for the Economy Rizal Ramli. The committee
\nhas the final say on major bank and corporate restructuring deals
\nworked out by IBRA.<\/p>\n
The FSPC was formed early last year following the high profile
\nBank Bali scandal, which allegedly involved a senior official of
\nIBRA. The committee was supposed to ensure good governance at the
\nagency.<\/p>\n
But Director General of Financial Institutions at the finance
\nministry Darmin Nasution admitted that over time the FSPC had
\ndeviated from its main function as stipulated in the presidential
\ndecree.<\/p>\n
\"Frankly speaking, the FSPC has not only set policy guidelines
\nbut it has also been active in policy execution, approving or
\ndisapproving restructuring programs on a case by case basis,\"
\nDarmin told legislators.<\/p>\n
\"The FSPC must focus on policy guidelines, while the
\nsupervisory function must be exercised by full-time
\nprofessionals,\" he added, referring to the agency's oversight
\ncommittee, which is chaired by former finance minister Mar'ie
\nMuhammad, a figure known for his strong integrity.<\/p>\n
The House also said in its conclusion that the oversight
\ncommittee must review past decisions made by the FSPC. It is not
\nclear, however, whether this would be feasible or whether the
\ncommittee would be allowed to annul decisions that it made in the
\npast.<\/p>\n
The FSPC has been accused of intervening excessively into
\nIBRA's affairs, thus causing holdups for the agency in completing
\nits bank and corporate restructuring program, something which is
\ncrucial for economic recovery.<\/p>\n
Earlier this year, two top IBRA officials tendered their
\nresignations amid rumors that they could no longer perform their
\nduties properly due to excessive interference by the FSPC,
\nincluding in respect of the restructuring of debts owed by
\ninfluential conglomerates.<\/p>\n
IBRA, a unit under the finance ministry, controls a huge pool
\nof assets, worth more than Rp 650 trillion, that were transferred
\nfrom the ailing banking sector and former recalcitrant bank
\nowners. The massive extent of the assets managed by the agency
\nmakes IBRA vulnerable to intervention from politicians and
\ninfluential businessmen. The agency is mandated to restructure
\nthe assets it manages and sell them to raise cash.<\/p>\n
One of the biggest and most controversial decisions taken
\nrecently by the FSPC concerned the restructuring of the huge debt
\nowed by petrochemical giant PT Chandra Asri to a consortium of
\ncreditors led by Japan's Marubeni Corporation.<\/p>\n
Despite the fact that the committee reached a deal with
\nMarubeni, so far IBRA has continued to reject it on the grounds
\nthat the Japanese creditor must convert more of its loans into
\nequity in Chandra Asri.<\/p>\n
Emotional<\/p>\n
Meanwhile, IBRA Chairman Edwin Gerungan was grilled by some
\nlegislators during Tuesday's hearing over the recent sale of 25
\npalm oil plantations to Malaysia's Kumpulan Guthrie Bhd., for a
\nprice of US$368 million.<\/p>\n
The transaction was sealed in March. At a hearing in February,
\nsome legislators had urged the government to cancel the planned
\nsale. The government, however, persevered with the plan but
\npromised to request that Guthrie maintain the commitment made by
\nthe plantations' former owner to help local communities.<\/p>\n
IBRA, however, did not formally notify the House that the deal
\nhad been closed, causing anger among some legislators.<\/p>\n
Edwin formally admitted the mistake during Tuesday's hearing,
\nand attempted to apologize.<\/p>\n
\"It's not enough for you just to apologize. If you're a
\ngentleman you must resign,\" said United Development Party (PPP)
\nlegislator Uray Faisal Hamid.<\/p>\n
\"I'd be only too happy if I'm dismissed over this case,\"
\nreplied Edwin emotionally.<\/p>\n
But Uray retorted: \"You shouldn't wait to be dismissed ... You
\nshould tender your resignation.\"<\/p>\n
Edwin said: \"OK, I'll do that.\" Other legislators then
\nattempted to calm the situation and urged Edwin not to resign.
\nEdwin declined to comment following the hearing. (rei)<\/p>",
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