Council to investigate lost Sheraton shares

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.