Govt to seek 'consensus' with House over MSAA

Govt to seek 'consensus' with House over MSAA

JAKARTA (JP): The government is to meet with the House of
Representatives Tuesday (today) to seek a "consensus" over the
controversial Master of Settlement and Acquisition Agreement
(MSAA), according to Attorney General Marzuki Darusman.

Marzuki said late on Monday that the consensus included a
clarification on whether former bank owners who had signed the
MSAA should also be held accountable for violating banks' legal
lending limits.

"We must make clarifications first so that we won't get
confused. If there's no clarity on how to treat the MSAA, there
will be continual legal complications," he told reporters
following a meeting with senior economic ministers.

"There should be no different interpretations (on MSAA)," he
added.

The MSAA refers to the agreement between some powerful former
bank owners including the Salim Group, Bob Hasan, Sjamsul
Nursalim and Usman Admadjaja with the Indonesian Bank
Restructuring Agency (IBRA) during the administration of former
president B.J. Habibie.

Under the agreement, the former bank owners pledged some of
their assets to IBRA to repay their debts to the government.

The banks received massive liquidity support from the
government via the central bank to help them survive the massive
run when confidence in the industry was at its lowest point.

But some of the banks had also violated the legal lending
limit by channeling most of their money, including liquidity
support, to their affiliated businesses.

Former coordinating minister for economy, finance and industry
Kwik Kian Gie was the first to attack the MSAA (when he was still
in office), pointing out that the agreement would result in huge
losses for the state because the assets pledged by the former
banks owners would not be sufficient to cover their obligations.

Kwik wanted the MSAA to be revised with former bank owners
held responsible for the deficit.

Under the agreement, the former bank owners were not
responsible if the market value of their assets dropped.

The controversy over the MSAA was also focussed on the fact
that the former bank owners who had signed the agreement were
freed from all responsibility for the violation of the banks'
legal lending limits. The violation of bank ruling is a crime
which could not be settled by simply surrendering assets.

"We have to have clarification on this issue first. That's why
we are going to meet with the House tomorrow," Marzuki said.

The government then asked the House to help decide the fate of
the MSAA. The House has formed a special team to study the MSAA.

Marzuki also said that the other clarification that needed to
be made was whether IBRA had already taken the necessary
administrative sanctions for those former bank owners who failed
to meet the MSAA.

"We think that IBRA has not taken the necessary action," he
said.

Some of the former bank owners have also reportedly failed to
meet the MSAA, including by failing to surrender the promised
assets by the set deadline.

IBRA is a unit under the finance ministry with a mandate to
help restructure the country's banking and corporate sector.

The agency controls billions of dollars worth of assets
transferred from closed banks, nationalized banks and
recapitalized banks.

IBRA is also mandated to sell some of the assets to raise cash
to help finance the state budget burdened by the government's
bank recapitalization cost.

The agency is targeted to raise some Rp 18.9 trillion this
year, and so far it has raised some Rp 11 trillion.

IBRA has plans to divest its ownership in four publicly listed
banks including Bank Central Asia (BCA), Bank Niaga, Bank
Internasional Indonesia and Bank Universal this year.

IBRA deputy chairman Jerry Ng said on Monday that the agency
would seek approval from the House on Oct. 5 for the divestment
plans.(rei)