Another shakeup at IBRA

There must have been something fundamentally amiss in the way the government oversees the Indonesian Bank Restructuring Agency (IBRA) that has prompted so many shakeups in the agency's top management within less than three years of its operations. The agency that will only be three years old later this month had its chairman replaced for the fifth time last November. Earlier in October, its senior deputy chairman was fired for unknown reason while he was overseas on a roadshow to promote the sales of assets to foreign investors.

Then it was confirmed on Monday that two of its five deputy chairmen have tendered their resignations for personal reasons. The damage incurred by such a move is not limited only to the loss of the quitting officials but also adversely affects the working morale and teamwork spirit within the agency because these changes will always be followed by the resignation of key members of the working teams already nurtured by the outgoing senior officials.

Such shakeups or reorganization would not normally cause great concern, nor would it merit a comment in this column, but the institution affected is IBRA, which is currently perhaps the most important economic organization in the country. It is worth recalling that the agency now manages more than US$64 billion in assets taken over from closed, nationalized and recapitalized banks and is by itself responsible for the collection of more than 10 percent of total state revenue for this fiscal year. As the assets consist mostly of enterprises the agency practically manages all major banks and most major companies and consequently plays a vital role in determining the pace of economic recovery.

Even though IBRA said on Tuesday that the two senior officials would remain in their current job positions until their resignations were accepted by the finance minister, the agency's performance will certainly be affected, especially because Jerry Ng is responsible for bank restructuring and Mahmuddin Jassin for asset management investment, two of the most important programs of the agency.

Financial remuneration is obviously not behind the resignation because the level of pay at IBRA is among the highest in domestic institutions which is one of the reasons as to why the agency has been able to recruit some of the best brains in the country.

Jassin kept tight-lipped about his reason for leaving but Jerry Ng's reason for quitting is very weak, apparently cited as being only to avoid rocking the boat. He said he decided to quit as the bank's restructuring process had technically reached its completion and he thought it was now time to pursue his career at another bank (Standard Chartered Bank in Singapore). As a well- experienced banker Ng must know that what has so far been completed is only recapitalization. The other most important element of the program -- the operational restructuring of banks -- has only just started.

The resignation of the two senior officials has once again reminded us of the criticism often targeted at the ministerial Financial Sector Policy Committee that is headed by chief economics minister Rizal Ramli. This committee is the highest decision-maker and policy-making body for IBRA and has to approve every major deal processed by the agency's management.

But this committee has often allegedly acted as a conveyor of political pressures from vested-interest groups, notably businesspeople (and biggest debtors) with strong connections with political leaders who have lobbied for specially favorable treatment.

Obviously, bright professionals in the IBRA's top management such as Ng and Jassin would find such a working environment completely inconducive to their professional competence and integrity, two vital requirements for effective implementation of the agency's role that is ripe for abuse. Such professionals are usually capable of, and have the courage to stand up against insensible and irrational directives from their boss and prefer to quit, rather than compromising their integrity.

The government must now realize that undue political intervention into IBRA's work would eventually not only push out most of the agency's brightest staff with high principles and integrity. It would also damage investor confidence in IBRA because stability and continuity in senior management is pivotal to the agency's ability to do its job effectively.