Court rules IBRA's takeover of bank Bali illegal

JAKARTA (JP): The Jakarta State Administrative Court ruled on Thursday that the takeover of Bank Bali by the Indonesian Banking Restructuring Agency (IBRA) last July was illegal and the bank should be returned to its former controlling owner, Rudy Ramli.

The court ruled that the central bank, Bank Indonesia (BI), must revoke its decree that placed Bank Bali under IBRA management and return the bank and its management to the status before it was issued.

Rudy filed a lawsuit against the government last October accusing BI and IBRA of having taken over Bank Bali illegally and without protecting the bank's best interests.

"The most important thing is that justice has now been achieved," said Rudy, formerly Bank Bali president and member of the bank's founding Ramli family, following the court's ruling.

IBRA took over Bank Bali last July after the bank failed to meet the requirement of raising 20 percent of its recapitalization costs.

The government's recapitalization program aims at bringing banks' capital adequacy ratio (CAR) -- a bank's asset to credit ratio -- to a minimum of 4 percent.

The government puts up to 80 percent of the recapitalization funds needed, while bank owners are required to inject the remaining 20 percent.

Upon learning of the verdict, central bank governor Sjahril Sabirin and IBRA chairman Cacuk Sudarijanto said they would file an appeal.

Sjahril asserted that the government move to take over Bank Bali was valid.

"The take over was legal. Therefore BI and IBRA will file an appeal shortly," Sjahril told reporters.

BI later told a media conference that during the period pending the appeal IBRA would still manage Bank Bali.

IBRA deputy Gerry Ng further assured the public that their deposits in the bank would remain safe under the government's guarantee blanket program.

However, Gerry conceded that the court ruling would automatically cancel an extraordinary Bank Bali shareholders meeting scheduled for Friday (today) to approve a rights issue plan, which the bank requires for its recapitalization.

This cancellation will sabotage the last-minute scramble by the government to meet the deadline for bank restructuring -- one of the requirements to qualify for another disbursement of loans from the International Monetary Fund bailout fund.

Latest reports from the Jakarta Stock Exchange show that as of this month Bank Bali is 49.18 percent owned by Germany's Deutsche Boerse Clearing AG, 5 percent by Rudy's PT Sarijaya Wirasentosa, 8.3 percent by Japan's Sanwa Bank Ltd. and 27.24 percent by the investing public.

The central bank defended its position on the takeover, saying it had granted Bank Bali four months, instead of the normal one, to come up with the 20 percent in recapitalization funds.

The central bank further argued that it was Bank Bali that brought in Standard Chartered as its partner in raising 20 percent of the recapitalization costs, a move that required the deadline for its recapitalization to be extended by three months.

Bank Bali's deal with Standard Chartered Bank ended in tatters in early July after the UK bank discovered during a due diligence that Bank Bali had made a questionable payment of Rp 546 billion to third parties -- what later became known as the politically charged Bank Bali scandal.

However, Rudy argued in his lawsuit that the government had forced Bank Bali to accept Standard Chartered as its strategic partner.

He also said the bank was never included in the process of Standard Chartered's entrance, and further accused the government of conspiracy with the foreign bank to help it acquire a 20 percent stake of Bank Bali at a cheap price.

The court's ruling marked another legal blow for IBRA in cases involving Bank Bali.

Last December, a Jakarta court rejected a criminal suit filed by the government against Rudy and other former Bank Bali directors for their alleged involvement in the scandal.

Early this month, the South Jakarta District Court dropped all charges against Djoko Tjandra, the key suspect in the Bank Bali scandal, on technical grounds. (bkm/09)