DPR supports Texmaco loans from BNI

DPR supports Texmaco loans from BNI

JAKARTA (JP): The House of Representatives (DPR) endorsed on
Tuesday the almost US$1 billion in loans the publicly listed
Texmaco Group obtained from state Bank BNI as normal business
transactions.

House Commission IX for finance and budget concluded, after
grilling Texmaco's management headed by company president
Marimutu Sinivasan for almost three hours, that the loans
obtained by Texmaco did not amount to preferential treatment
because the facility was also available to other export-oriented
companies hit by the economic crisis.

"Texmaco's business in textile and engineering is a national
asset that should be helped to be competitive globally,"
Sukowalujo Mintorahardjo, chairman of the commission, said.

"This commission concludes that Texmaco was fully entitled to
make use of Bank Indonesia's preshipment financing facility
because if Texmaco were to default on its foreign loans it could
have far-reaching repercussions on Indonesia's credit rating,"
Sukowalujo said, reading from a statement agreed upon by the
commission.

The House summoned the Texmaco management following a
disclosure by State Minister of Investment and State Enterprises
Development Laksamana Sukardi at the House on Monday that former
president Soeharto directly intervened to enable Texmaco to get
$754 million and Rp 1.9 trillion in loans from the central bank
through Bank BNI between November 1997 and February 1998.

"Texmaco should be considered a national asset and it is
entitled to government assistance in time of crisis," said Theo
Tumion, a legislator of the PDI Perjuangan (Indonesian Democratic
Party of Struggle) faction, at the hearing.

Tumion conceded that favoritism seemed to have played a role
in securing the deal, but he argued that the regulation was not
tailor-made for Texmaco.

On Sunday, Bank BNI president Widigdo Sukarman also defended
the Texmaco loans and the restructuring deal being negotiated as
a normal business transaction.

Sinivasan, who started his textile business in the 1950s,
briefed the legislators on the prospects of his widely
diversified business and the problems it faced due to the
economic crisis, especially the plunge of the rupiah's exchange
rate against the American dollar from Rp 2,500 in 1997 to as low
as Rp 17,000 last year.

He said the Texmaco loans surfaced as a controversy mainly
because of misperception and the misreading of records on the
loans.

"Laksamana's statement (on Monday) is not wrong but the
records he got are not accurate and complete," Sinivasan said.

He said there was by no means any collusion or irregularity
within the process through which Texmaco obtained the loans to
survive the economic turmoil.

"I approached Bank Indonesia for a loan which in turn
suggested that I write a letter to president Soeharto, which I
did. What is wrong with that? Who else could I ask for
assistance?" Sinivasan said.

He denied that he personally met with Soeharto, saying "I did
not met with Soeharto. Nor do I have business with his children."

Moreover, he added, the loan facility already existed before
Texmaco asked for it.

Sinivasan said the only outstanding problem loan to BNI was
for $600 million, which he said Texmaco was working on
restructuring through a package of a debt-to-equity swap and
rollover deals.

Sinivasan said it was Bank BNI that proposed the debt-to-
equity swap deal as the state bank apparently sought to cash in
on potential gains in Texmaco after it listed its textile and
engineering subsidiaries on the Nasdaq market in New York.

"We are determined to settle all of this (debt) in full
without any reductions," Sinivasan added.

Texmaco plans to list two of its units on Nasdaq after
reaching debt restructuring agreements.

Sinivasan said the group expected to sign a restructuring deal
next week with foreign banks on $1.4 billion in loans to its
polyester unit, publicly listed Polysindo Eka Perkasa.

Texmaco is a widely diversified group that produces textiles,
garments, textile machinery, machine tools, synthetic fibers,
rototillers and trucks.

Separately, Attorney General Marzuki Darusman said on Tuesday
he would investigate the Texmaco loans and promised to handle the
case properly.

He cautioned, however, that presumption of innocence must be
upheld in handling the case.

Marzuki said that Laksamana had promised to provide him with
documents related to the case.

In a related development, Laksamana said that President
Abdurrahman Wahid supported his move to root out corruption in
state enterprises, including state banks.

He explained that cleaning up Bank BNI as well as other state
banks was very important. Bank BNI is expected to be
recapitalized by the government at a total cost of Rp 52.8
trillion. (rei/prb/03)