Govt reviews agreement with former bank owners

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)