BI adamant Salim won't return to helm at BCA

BI adamant Salim won't return to helm at BCA

Berni K. Moestafa, The Jakarta Post, Jakarta

Bank Indonesia has threatened to nullify the Salim Group's
ownership of PT Bank Central Asia should the group regain control
of the bank through the purchase of BCA's 51 percent stake from
the government.

Bank Indonesia Governor Sjahril Sabirin said that, if Salim
turned out to be the buyer of the BCA shares, the central bank
would annul the group's ownership of the bank.

"As far as Bank Indonesia is concerned, we will not give them
(Salim) our permission," he told reporters on Friday.

The government, via the Indonesian Bank Restructuring Agency
(IBRA), is offering a 51 percent stake in BCA for sale.

Eight bidders have lined up to purchase the shares. But there
is suspicion that some of them are acting as nominees for Salim
to regain control of BCA.

Bank Indonesia is conducting a fit and proper test on the
bidders to, among other things, filter out Salim's money.

Salim has been banned from buying back BCA, stemming from
charges of having managed the bank recklessly.

Under Salim, BCA extended many of its loans to affiliated
firms -- more than a few of which, in turn, went bust during the
1997-1998 financial crisis.

To save the country's once-largest private bank from collapse,
IBRA recapitalized BCA with government bonds. Interest rates on
these bonds are paid for by the state budget.

Now Salim owes the government some Rp 52 trillion (about
US$4.97 billion) that it must repay by surrendering its ownership
of various companies, including BCA.

Under the so-called Master of Settlement and Acquisition
Agreement (MSAA), Salim cannot buy back BCA unless it first
settles its outstanding debts. The MSAA regulates the transfer of
Salim's assets to IBRA.

But even if the group makes good on its debts, it must still
get Bank Indonesia allow the group reenter BCA.

Speaking on the subject, Sjahril said that, if Salim secures
government approval, Bank Indonesia could drop the group from its
blacklist.

"If the government says it will honor the MSAA, than we will
do the same," he said.

That, however, would contradict Bank Indonesia's own fit and
proper test, which bans Salim from reentering BCA.

According to Sjahril, the government's MSAA deal may overrule
criteria set forth under the fit and proper test.