Agus Martowardojo appointed to lead Bank Mandiri

Agus Martowardojo appointed to lead Bank Mandiri

Rendi A. Witular and Muninggar Sri Saraswati, The Jakarta Post, Jakarta

The shareholders of troubled state-owned Bank Mandiri decided on
Monday to appoint Agus Martowardojo as the new president of the
bank and dismiss four of the nine directors of the country's
largest bank in asset terms.

Agus is the current president of publicly listed Bank Permata,
the country's seventh-largest bank in terms of assets, which is
owned by a consortium made up of Britain's Standard Chartered
Plc. and local automotive firm PT Astra International.

The 49-year-old banker was reported to have strong backing
from President Susilo Bambang Yudhoyono. The government controls
70 percent of Bank Mandiri, with the remaining shares being held
by retail investors.

Agus' appointment, however, is somewhat controversial as he
was among the Bank Mandiri former executives who were recently
questioned by the Attorney General's Office (AGO) over an alleged
massive lending scam worth more than Rp 12 trillion (US$1.26
billion).

The AGO questioned Agus over his role in extending problematic
loans when he still served as Bank Mandiri managing director for
risk management and credit restructuring between 1999 and 2000.

The bank's four directors -- president director E.C.W. Neloe,
vice president director I Wayan Pugeg, corporate banking director
M. Sholeh Tasripan and commercial banking director Ventje
Rahardjo -- were dismissed by the annual shareholders meeting.

The AGO is currently investigating the scandal with Neloe,
Pugeg and Tasripan having already been declared suspects by
prosecutors.

Neloe attended the shareholders meeting after obtaining the
consent of the AGO to take a break from questioning. His lawyer,
M. Assegaf, said the prosecutors were questioning him about his
career history.

Head of the AGO investigators Arnold Angkouw said the
questioning would continue on Tuesday, starting at 9 a.m.

"Neloe looked calm while responding to the 41 questions. But
not all the shareholders were satisfied with his explanations,"
said Mahmuddin Yasin, a deputy to the state minister for state
enterprises.

He said, however, that the shareholders had no option but to
approve the accountability statements of the board of directors
and the 2004 financial accounts as the bank's independent auditor
had given an unqualified opinion on these.

During the meeting, shareholders also agreed to promote the
bank's director for risk management I Wayan Agus Mertayasa to
vice president director and group head for multi-industry Abdul
Rahman as director for corporate banking.

Four directors will remain in this current posts -- Omar
Sjawaldy Anwar as consumer banking director, Nimrod Sitorus as
corporate secretary, JB Kendarto as treasury and international
director and Zulkifli Zaini as distribution network director.

The shareholders also appointed Edwin Gerungan, former
chairman of the now-defunct Indonesian Bank Restructuring Agency,
to replace Binhadi as chief commissioner of Bank Mandiri.

Other newly appointed members of the board of commissioners
include Muhayat, Soedarjono, Richard Claproth, Pradjoto, Gunarni
Soeworo and Yap Tjay Soen.

The shareholders also approved a plan to allocate 50 percent
of the bank's 2004 net profit for a dividend payment worth some
Rp 2.62 trillion.

Earlier in the day, Vice President Jusuf Kalla said the
government had decided to choose Agus because of his age and
expertise, primarily in "fixing" banks with problems, such as
Bank Mandiri.

"Bank Mandiri is the biggest bank. In terms of the national
interest, the bank has to serve in the vanguard as regards
developing our economy," he said.