Arthur Andersen to fix Bank Bali recapitalization cost

JAKARTA (JP): The Indonesian Bank Restructuring Agency (IBRA) will stick with the financial audit result of Arthur Andersen in deciding the final recapitalization cost of Bank Bali, according to agency public relations official Franklin Richard.

He said on Monday that Arthur Andersen was expected to complete its due diligence audit at the end of this month.

"The Rp 4.3 trillion is not confirmed yet," he told reporters, referring to the Bank Bali recapitalization cost figure calculated by KPMG in July which conducted the audit at the behest of would-be investor Standard Chartered Bank (SCB) of the U.K.

There have been allegations, including from the former owner of Bank Bali, that the Rp 4.3 trillion recapitalization cost figure was too much, and would only benefit SCB.

The KPMG audit earlier in March, on behalf of the central bank, estimated the recapitalization cost of Bank Bali at Rp 2.5 trillion.

Franklin said that once Arthur Andersen completed its work, the publicly listed Bank Bali would immediately launch a rights issue in early December to raise funds for its recapitalization program.

The government has committed to becoming a standby purchaser of the remaining rights which are not exercised by public investors.

The agency took over Bank Bali in June after its owner failed to provide the minimum 20 percent funding requirement for recapitalizing the bank.

The agency entered into an agreement with SCB in July in which the latter was given management control in return for its 20 percent investment commitment in Bank Bali.

SCB had expressed its commitment to buy up to a 20 percent stake in Bank Bali in April for US$546 million which it later put into an escrow account at Chase Manhattan Bank.

SCB has the rights to buy up to 100 percent ownership in Bank Bali over a five-year period.

IBRA initially planned to launch the Bank Bali rights issue in October, but had been delayed twice following the damaging impact of the high profile Bank Bali scandal.

The Bank Bali scandal centers on the legally dubious transfer of some Rp 546 billion ($80 million) from the bank to a private firm linked to influential people close to former president B.J. Habibie.

SCB has been facing strong resistance in its efforts to enter into Bank Bali including from the bank's employees.

But IBRA Chairman Glenn S. Yusuf said at the weekend that SCB so far proposed the most attractive price offer for Bank Bali.

Meanwhile, a team of five defense lawyers visited the National Police detectives to complain about the validity of the PricewaterhouseCoopers (PwC) audit, which states that their three clients, businessman Arung Gauk Jarre and Golkar cadres Agus Sudono and Fredy Latumahina, had received billions from the Bank Bali scandal.

"Several fatal mistakes have been made by PwC. The audit cannot be claimed valid as a result," lawyer Ruhut Sitompul told reporters at the National Police detectives office.

The mistakes, Ruhut said, included the following: PwC interviewed the suspects without explaining to them where the investigation would lead to; during the course of the investigation PwC was never represented by an Indonesian lawyer or any law expert who understood existing regulations; and that no representative of any of the banks listed in the audit as holding accounts of the alleged suspects, were investigated.(rei/ylt)