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)