Calls mount for IBRA to sack Lippo's commissioners

Calls mount for IBRA to sack Lippo's commissioners

Dadan Wijaksana, The Jakarta Post, Jakarta

Outspoken State Minister of National Development Planning Kwik
Kian Gie has now joined the wave of criticism urging the
Indonesian Bank Restructuring Agency (IBRA) to replace Bank
Lippo's current independent commissioners.

Kwik, who is also a member of the powerful Financial Sector
Policy Center (FSPC) which oversees IBRA, said on Thursday that
the current fiasco in the publicly listed bank occurred partly
due to the independent commissioners' inexperience in business
affairs.

"That's why they have to be replaced by people who have
extensive experience in that field. In time, the FSPC will tell
them what their responsibilities are," Kwik said as reported by
detik.com.

His remarks came following recent calls for IBRA to impose
tough sanctions, including dismissal, on the bank's management
and board of commissioners for incompetence.

Currently, of the eight members on the board of commissioners
in the bank, three of them are independent, representing the
government as the bank's majority shareholders.

The three are Syafruddin Temenggung (the current IBRA
chairman), Anggito Abimanyu (senior advisor to the Minister of
Finance) and Hadiah Herawatie (assistant deputy of the
Coordinating Minister for the Economy).

Mochtar Riyadi, Roy Trijadi, Rudi T. Bachrie, Ismail Ning and
Markus Parmadi, are the remaining members of the board. Mochtar
was the former controlling owner of Bank Lippo before the
government recapitalized the bank in the wake of the late 1990s
financial crisis.

Supervising the bank's way of doing business and safeguarding
state assets held by the bank in the interests of the nation are
among the main reasons why the government had placed its people
as independent commissioners in the bank.

However, their competence has been strongly questioned after a
revelation of suspected fraud committed by the management -- whom
some regard acted on behalf of the bank's former owner.

Allegations have been on the rise that the management had
committed fraud to deliberately worsen the bank's financial
condition, with the view that if successful, a rights issue would
then become an option, which in turn would open the way for the
former owner of Lippo to repurchase the bank at a very cheap
price.

Under the current price, the government's 59 percent stake in
the bank would only be worth around Rp 600 billion, way below the
Rp 7.2 trillion in state funds the government had to inject when
it recapitalized the bank in 1999.

Analysts have also urged the government to make sure that
independent commissioners stationed at other banks work properly
to avoid further losses to the state.