What a mess at IBRA<\/p>\n
How very bleak the situation appears with the Indonesian Bank
\nRestructuring Agency (IBRA), now seen as the most powerful
\neconomic organization in the country. Controversies, questionable
\ndeals and outright scandals have plagued the agency since its
\nestablishment almost four years ago.<\/p>\n
Though every president after Soeharto, starting with B.J.
\nHabibie, then Abdurrahman Wahid and now President Megawati
\nSoekarnoputri, had always pronounced clean governance as the top
\nobjective of their administration, political meddling and
\ncollusion appear to be the hallmark of most deals IBRA has made
\neither in asset sales or debt restructuring.<\/p>\n
No wonder many now consider the agency to be a den of thieves,
\na tag previously applied to Bank Indonesia before it became
\npolitically independent in May 1999.<\/p>\n
The latest and most blatant example is the highly
\ncontroversial deal in December in which IBRA sold PT Indomobil
\nSukses International, the country's second largest automobile
\ngroup that was ceded to the government in 1998 by the Salim
\nfamily to settle part of its debts to the central bank.<\/p>\n
As more information about the hurried deal-making process was
\nleaked to the public, one cannot help but conclude that
\nIndomobil's sale to a consortium led by PT Trimegah Securities
\nviolated all regulations and procedures laid out by the
\ngovernment and caused the state hundreds of millions of dollars
\nin losses.<\/p>\n
Consultant PricewaterhouseCoopers (PwC) had recommended that
\nthe tender process take about 21 weeks, given the size and
\ncomplexity of Indomobil, its subsidiaries and its contracts with
\ncar principals overseas. But IBRA used recommendations by
\nDeloitte, Touche & Tomatsu to speed up the process to a mere two
\nsteps -- final bid and due diligence -- that took just three
\nweeks.<\/p>\n
Obviously only insiders were willing to submit bids, as other
\ninterested bidders would have been disadvantaged by asymmetrical
\ninformation to make a proper assessment of Indomobil within such
\na short period of time.<\/p>\n
The result was predictably a fire sale, which was closed on
\nDec. 19 at only Rp 625 a share for a total transaction value of
\nRp 625 billion, way lower than the government's acquisition price
\nof Rp 2,500\/share in late 1998. Indomobil's value was assessed by
\nPwC in 2000 at between Rp 1.6 trillion and Rp 2.1 trillion.<\/p>\n
Analysts and most IBRA officials themselves consider the sale
\nprice disastrously low, especially now when the economic and
\npolitical climate is much more stable than it was in 1998 and the
\nautomobile market outlook much brighter. Moreover, IBRA has
\nalways attached a 20 percent premium price to the sale of a
\nmajority ownership of an asset, but the Rp 625 closing price was
\nstill much lower than Indomobil's average share price of Rp 753.5
\nin November.<\/p>\n
That Indomobil's creditors and car principals overseas raised
\nno questions about the winning bidders, even though they were
\nidentified only as a consortium led by a securities company, only
\nstrengthens the suspicion that they are familiar with and have
\nlong been closely associated with the new owners. This gives
\nfurther weight to allegations that the winning bidders are
\ninsiders.<\/p>\n
Whistle-blowers at IBRA also revealed that the agency simply
\nignored a November recommendation from its Asset Management
\nInvestment division against a speedy sale of Indomobil. Yet in
\nthe most egregious violation of procedures, IBRA did not ask for
\nprior consent from the Financial Sector Policy Committee of
\neconomics ministers, whose approval is only necessary for deals
\nvalued at Rp 1 trillion and more.<\/p>\n
And why did it seem that State Minister of State Enterprises
\nLaksamana Sukardi, who is in charge of supervising IBRA, simply
\nsat back and nonchalantly observed how some IBRA officials bent
\nalmost all the standard, step-by-step procedures for the tender
\nprocess?<\/p>\n
The argument by some IBRA officials that approval from the
\nministerial committee is not needed for transactions worth less
\nthan Rp 1 trillion only strengthens the suspicion that the
\nhurried sale process had been contrived simply to land a deal
\nvalued at less than Rp 1 trillion.<\/p>\n
IBRA's reasoning that it was desperate to meet its target of
\nrevenue for the state budget contradicted a statement by IBRA
\nchairman Putu Gede Ary Suta in November in which he claimed that
\nhis agency was close to achieving its revenue target for 2001.<\/p>\n
It is most imperative for the government to audit the
\ntransaction and deal firmly with those responsible for the
\ndebacle, otherwise IBRA, which manages more than US$63 billion in
\nstate assets, and all major private and state banks will entirely
\nlose the confidence of the public and the market.<\/p>",
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"sponsor": "Okusi Associates",
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