Scandal's fallout hits Bank Bali rights issue<\/p>\n
JAKARTA (JP): The high-profile scandal centering on a murky
\ntangle of transactions has made it likely that Bank Bali will
\ndelay its rights issue plan until early next year.<\/p>\n
The Capital Market Supervisory Agency (Bapepam) said that it
\ncould not guarantee its approval of Bank Bali's rights issue
\nbefore Dec. 30, the date set by the bank to float the rights
\nshares.<\/p>\n
The head of Bapepam's Corporate Financial Analysis Bureau,
\nFreddy R. Saragih, said his office was still unable to approve
\nthe plan because it had yet to receive all the necessary
\ninformation.<\/p>\n
He said Bapepam needed more explanations from Bank Bali's
\nwould-be investor Standard Chartered Bank (SCB) and the
\nIndonesian Bank Restructuring Agency (IBRA) on their plans for
\nthe bank.<\/p>\n
\"If we are not satisfied with their explanation, we won't give
\nthe rights issue approval,\" he said.<\/p>\n
Bapepam, he said, was awaiting copies of the agreements
\nbetween IBRA and SCB. It had only the executive summary of the
\nagreements as laid out in Bank Bali's rights issue prospectus.<\/p>\n
Bapepam will examine the legal aspects of the agreements and
\ndetermine if the agreements were against the interest of the
\ninvesting public.<\/p>\n
The investment agreement allows SCB to buy initially a 20
\npercent stake in Bank Bali from the government after the rights
\nissue. SCB is also entitled to further increase its shareholding
\nin Bank Bali by buying up the remaining shares from the
\ngovernment within five years.<\/p>\n
The agreement also guarantees SCB's interest in privatizing
\nBank Bali through filing a request to delist Bank Bali from the
\nJakarta and Surabaya stock exchanges.<\/p>\n
Freddy said Bapepam was responsible for protecting investors'
\ninterest and therefore was seeking as wide disclosure of
\ninformation as possible for the public.<\/p>\n
\"We have yet to make an evaluation and clarification,
\nparticularly on the investment and management agreement,\" he
\nsaid.<\/p>\n
Freddy said Bapepam also needed another explanation from IBRA
\non the process of its takeover of Bank Bali.<\/p>\n
Bank Bali's former majority owners Rudy Ramli and Herman Ramli
\nhave sued Bank Indonesia's Governor Sjahril Sabirin at the State
\nAdministrative Court for what they claimed to be 'questionable
\nand improper procedures' under which the bank was taken over and
\nput under IBRA.<\/p>\n
The Ramli family demanded that Bank Bali's takeover be
\ndeclared null and void and the bank be restored to its status
\nbefore its July 23 take over.<\/p>\n
The case is still pending at the State Administrative Court.<\/p>\n
Early this month, a Jakarta district court decided to call off
\nthe trial of Rudy and three other former Bank Bali directors
\nallegedly involved in the Bank Bali fund scandal on the grounds
\nthat the prosecutor's charges were vague and unacceptable.<\/p>\n
The scandal revolves around the transfer of almost $80 million
\nin early June from Bank Bali to a company controlled by a senior
\nofficial of the Golkar party. The fund, paid as commission to get
\nits interbank claims reimbursed by IBRA under the government
\nguarantee scheme for bank deposits and claims, was alleged to be
\nused to bankroll B.J. Habibie's presidential bid.<\/p>\n
The fund was, however, returned to Bank Bali in August.<\/p>\n
Rudy and several government officials are still under
\ninvestigation on charges of corruption related to the fund
\nscandal.<\/p>\n
Bank Bali has planned to conduct a 99-for-1 rights issue on
\nDec. 30 with the exercise price of Rp 60.68 a piece on the Rp 5
\nnominal value to raise funds for its recapitalization.<\/p>\n
The rights issue is expected to receive approval from Bapepam
\nand the bank's shareholders before Dec. 30. The trading period of
\nthe rights shares is scheduled between Jan. 6 and Jan. 12.<\/p>\n
As much as Rp 4.036 trillion would be raised through the
\nrights issue.<\/p>\n
Bank Bali's current rights issue plan has been based on the
\naudited June 30 financial statement, which is valid only until
\nthe end of this year.<\/p>\n
If the rights issue is delayed, the bank would have to use the
\nSeptember financial statement, but that would require at least
\nanother three months to complete the audit of the bank's
\nfinancial statement.<\/p>\n
Immamat Dalimunthe, an executive of securities company PT
\nVickers Ballas Tamara, said a delay in Bank Bali's rights issue
\nwould be good for public investors.<\/p>\n
He said the rights issue should be conducted only after
\ninvestigations into the Bank Bali scandal are completed.<\/p>\n
If Bank Bali continues with its rights issue before the
\nscandal is cleared, public investors will be hesitant to
\nexercise their rights, he said.<\/p>\n
The existing shareholders would lose up to 99 percent of their
\nownership after the rights issue if they do not exercise their
\nrights.<\/p>\n
Bapepam should stop its blinkered pursuit of reaching the
\ntargeted date if it wants to protect minority shareholders,
\nImmamat said.<\/p>\n
\"They said this is for the sake of the country's bank
\nrestructuring program, but is there a guarantee of the success of
\nthe program itself?\", he said.<\/p>\n
Bank Bali's rights issue plan is part of the government-
\nsponsored recapitalization program for private banks. Under the
\nrecapitalization program, the government will act as the standby
\nbuyer of the rights issue.<\/p>\n
The government will pay for its stake in Bank Bali through the
\nissuance of bonds worth up to Rp 4.036 trillion to raise the
\nbank's Capital Adequacy Ratio (CAR) to the 4 percent required
\nlevel.<\/p>\n
CAR is the ratio between the bank's equity and the risk-
\nweighted assets. The higher the ratio, the healthier the bank.<\/p>\n
Bank Bali earlier reported net losses of Rp 1.43 trillion in
\nthe first nine months of the year, compared to Rp 39.71 billion
\nin the same period last year. (udi\/vin)<\/p>",
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