Finance Minister approves Bank Arta Prima acquisition

Finance Minister approves Bank Arta Prima acquisition

JAKARTA (JP): Minister of Finance Mar'ie Muhammad has approved
the Artha Graha group's acquisition of scandal-plagued Bank Arta
Prima despite a lawsuit from former owners the Gunung Agung
group.

Director General of Financial Institutions Bambang Subianto
said yesterday that the finance minister had legalized the
acquisition with license no. SI/168/MK/1997, dated July 10.

"What is certain is that they have got the license," Bambang
said here yesterday.

Bambang declined to explain why the finance minister had
approved the sale of the problem bank.

Minister Mar'ie had said earlier that he would approve Artha
Graha's purchase of the bank if Bank Indonesia, the central bank,
recommended the deal.

Bank Indonesia submitted its recommendation to the Ministry of
Finance weeks ago, and it chose the Artha Graha group to salvage
Bank Artha Prima.

Bank Indonesia Governor J. Soedradjad Djiwandono said at a
recent hearing with the House of Representatives' banking
commission that the central bank chose Artha Graha for the job
because of its reputation and capability.

But Gunung Agung claims it is Bank Artha Prima's rightful
owner and has questioned the central bank's move and challenged
the legality of the acquisition.

H. A. Aryoso, one of Gunung Agung's lawyers, said the
government was too hasty in approving the acquisition.

"The government should have not approved the acquisition as
the ownership of the bank is still being contested in court,"
Aryoso said.

"We will not stop fighting for our rights."

Gunung Agung, controlled by PT Kosgoro and PT Trimuda, sold
Bank Arta Prima in July 1995 to PT Jagata Primabumi on the
condition that Jagata took over Gunung Agung's debts to the bank
amounting to Rp 187 billion (US$76.2 million at current rate) and
to other financial institutions amounting to Rp 174 billion.

Afterward Jagata asked Gunung Agung to issue promissory notes
worth Rp 174 billion to pay off Gunung Agung's debts to various
financial institutions and another series of promissory notes
worth Rp 150 billion, all underwritten by Bank Arta Prima.

Gunung Agung's lawyer Denny Kailimang said it agreed to issue
the promissory notes because Jagata promised to settle them all.
But Jagata failed to settle the debts, sparking the promissory
notes scandal.

Jagata Primabumi was formed -- by Kim Johanes, Jeffie Geovanie
and Hedijanto, an executive of the Dharmais foundation who was
acting in his personal capacity -- to acquire Bank Arta Prima.

As the promissory notes scam came to light, Jagata transferred
its ownership of Bank Arta Prima to Bank Indonesia, which then
assigned the Artha Graha group to take over the bank.

Gunung Agung is suing Jagata Primabumi for US$612 million over
the dispute.

Gunung Agung is also demanding the court return Bank Arta
Prima to it because Jagata breached their contract of sale. (rid)