Govt reviews agreement with former bank owners

JAKARTA (JP): Coordinating Minister for the Economy, Finance and Industry Kwik Kian Gie said on Monday the government was reviewing a debt settlement agreement signed by former bank owners and the Indonesian Bank Restructuring Agency (IBRA) last year.

Kwik said the agreement, reached during the administration of former president B.J. Habibie, could cause the government huge losses and burden tax payers.

"The Financial Sector Policy Committee (FSPC) is attempting to cancel the agreement," he told members of the Supreme Advisory Council during a hearing. He said he expected the House of Representatives to support the plan.

The FSPC, which groups several senior economic ministers and the attorney general, has the final say on key bank and corporate restructuring policies.

Kwik said the government's team of lawyers, led by Kartini Mulyadi and Fred Tumbuan, was still studying the legality of the agreement.

The Master of Settlement and Acquisition Agreement, or MSAA, which was signed by IBRA and former bank owners, called for the bank owners to surrender their assets to repay their debts to the government.

IBRA signed the MSAA after evaluating the assets and deciding they were sufficient to cover the debts. But according to the agreement, IBRA must cover the remaining debts if the surrendered assets prove to be insufficient.

The bank owners received massive liquidity support from the government in 1998 and 1999 during runs on the banks. The bank owners must repay the liquidity support because the banks violated the legal lending limit by channeling most of their money to affiliated business groups.

The Salim Group, for example, has surrendered its ownership in some 109 companies to settle the obligations of Bank Central Asia, which owed the government some Rp 48 trillion.

Also signing the MSAA were Bob Hasan, a co-owner of the now defunct Bank Umum Nasional; Sjamsul Nursalim, the owner of the now closed Bank Dagang Nasional Indonesia; and Ibrahim Risyad and Sudwikatmono, the owners of two smaller nationalized banks.

In addition to the MSAA, IBRA also signed a Master of Refinancing Agreement, or MRA, with several former bank owners. This agreement was signed because the agency believed the assets surrendered by these bankers were insufficient to cover their obligations.

The MRA was signed by Usman Admadjaja, the former owner of the nationalized Bank Danamon; and with the owners of the now defunct Bank Hokindo, Bank Modern and the Ongko Group, the other co-owner of Bank Umum Nasional.

Kwik said the MSAA would cause the government to suffer losses because it turned out that the surrendered assets were not enough to cover the obligations of the former bank owners.

He also said bank owners cited the MSAA to refuse to surrender additional assets as demanded by the government.

Separately, Minister of Finance Bambang Sudibyo said on Monday he had asked IBRA to recommend bankers who could be removed from immigration's blacklist.

Bambang said those bankers who qualified to be taken off the blacklist were those who had cooperated with IBRA in settling their debts.

"A certain set of requirements should apply for releasing those bankers, one of them is that they should first be considered cooperative bankers," Bambang said after attending the House of Representative's plenary meeting which passed a new tax law.

Bambang hinted further requirements would be set by President Abdurrahman Wahid.

The government sent the names of about 150 executives, mostly from closed banks, to immigration in 1999, preventing them from leaving the country for what the government said was imprudent banking practices. (rei/udi)