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.