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.