Bank Bali staff ask IBRA to probe SCB action

Bank Bali staff ask IBRA to probe SCB action

JAKARTA (JP): Employees of Bank Bali have sent a petition
letter to the Indonesian Bank Restructuring Agency (IBRA)
requesting it to investigate London-based Standard Chartered Bank
(SCB) over alleged fraud in its acquisition of shares in Bank
Bali.

"We urge IBRA to immediately start an investigation over any
possible wrongdoing committed by SCB during the process of
acquiring its stake in Bank Bali," the petition letter said,
adding that the report of the investigation should then be made
public.

Representatives of the bank's employees said that the petition
was supported by more than 1,000 employees.

Former Bank Bali president Rudy Ramli, in a hearing with the
House of Representatives earlier this month, claimed SCB used its
own accounting standards in its due diligence audit, resulting in
Bank Bali's recapitalization costs increasing significantly.

By marking up recapitalization costs, SCB was able to buy Bank
Bali shares at reduced prices, Rudi said at the hearing.

SCB denied the charge, saying the due diligence audit carried
out by public accounting firm KPMG was conducted according to
Bank Indonesia's standards.

The increase in recapitalization costs was a result of the
further deterioration of quality of Bank Bali's loan portfolio,
the British bank said in a statement.

In its due diligence audit, KPMG estimated Bank Bali's
recapitalization costs at Rp 4.3 trillion, much higher than the
Rp 2.5 trillion estimate of its March audit.

KPMG audited the bank in March on behalf of Bank Indonesia,
while in July it audited Bank Bali at the behest of the British
bank.

The petition letter, made available to The Jakarta Post on
Monday, also requested IBRA to temporarily relinquish the
authority of the caretaker management team and all other SCB
personnel placed at Bank Bali.

"IBRA should therefore appoint an independent caretaker
management team to oversee Bank Bali," the letter said.

The letter, dated Sept. 13, was sent to IBRA chairman Glenn S.
Jusuf and carbon copied to House of Representatives Commission
VIII for state budget and finance, the Coordinating Minister for
Economy, Finance and Industry Ginandjar Kartasasmita, senior Bank
Indonesia (BI) officials, the International Monetary Fund (IMF)
and the World Bank.

Bank Bali, one of several banks which qualified for the
government-sponsored recapitalization program, escaped government
takeover after SCB announced its readiness to buy a 20 percent
stake in the bank early this year.

However, the British bank dropped its strategic investment
plan with existing shareholders after its due diligence audit
discovered irregularities in Bank Bali's financial reports. IBRA
then took over the bank in late July and surprisingly ceded the
bank's management to SCB.

SCB then appointed its Southeast Asia head for corporate and
institutional banking, Douglas Beckett, to lead Bank Bali. He is
assisted by several senior officials of Bank Bali and SCB who are
being placed at Bank Bali.

The management reshuffle was part of an investment agreement
with IBRA, in which Standard Chartered would buy a 20 percent
stake in Bank Bali through a rights issue process scheduled in
October. (udi)