Mon, 12 May 2003

Council to investigate lost Sheraton shares

Zakki Hakim, The Jakarta Post, Jakarta

A council member said the recent disclosure of the city's dwindling equity in the Sheraton Media hotel has raised two major questions: why does the hotel have such huge outstanding debts and who were the decision-makers involved in the whole affair?

Ugiek Soegihardjo, a member of the City Council's Commission B for economic affairs, said the legislature was scheduled to meet this week with representatives of the administration to clear up the matter.

The city's Economic Administrative Bureau has said it will present the minutes of the hotel's shareholder meeting on Feb. 14, 2001, which should help establish who was responsible for the city's dwindling equity in the Sheraton, Ugiek told The Jakarta Post over the weekend.

He said the bureau also intended to present documents that could explain why the hotel has outstanding debts to Bank BNI 46 amounting to Rp 108.51 billion (approximately US$12.72 million) and to London Forfeiting Asia Limited worth US$50 million, which was guaranteed by the bank.

The council will also summon former city secretary Marolop Sinurat, a commissioner of the hotel in its early days, because he is believed to have knowledge of the city's dealings with the hotel, Ugiek said.

The council has demanded that the city's share in the hotel be returned to the 25 percent agreed upon initially, and that the 18,682 square meters of city land be returned.

The council also called for a thorough probe into the case, which involves media figure and possible presidential candidate Surya Paloh, who is reportedly one of the founders of PT Bhakti Ciptadaya (BCD), the city's partner in the joint venture company that owns the hotel.

In a meeting with the council on Thursday, the Economic Administrative Bureau provided clues as to how the city lost shares and property to the joint venture company that built and managed the Sheraton Media hotel on Jl. Gunung Sahari in Central Jakarta.

It was explained that the joint venture company had an enormous outstanding debt to Bank BNI 46, so in a debt restructuring measure in 1999 it was decided to exercise a debt for equity swap option during several shareholders meetings. After a shareholders meeting on Feb. 14, 2001, the ownership composition of the hotel was altered, giving BNI 46 66.39 percent of the shares, BCD 25.21 percent and leaving the city holding only 8.40 percent.

A source at the Indonesian Banking Restructuring Agency told the Post that BNI 46 could only retain the shares for two years, and therefore it might have to sell them in the near future.

If the bank were to sell the shares it would be difficult for the city to buy them back, considering that in 2000 the price was already Rp 9.4 million per share, a city official said.

The city might have to find a cheaper solution to gain back its 25 percent ownership in the hotel, or it might have to come up with about Rp 66.61 billion to buy at least 7,100 shares, he said.