Gus Dur's brother decides to quit IBRA, says Cacuk

JAKARTA (JP): President Abdurrahman Wahid's younger brother Hasyim Wahid has resigned from the powerful Indonesian Bank Restructuring Agency (IBRA), the agency's chief said.

"Yes, that is true. But he has yet to officially submit a letter of resignation," IBRA chairman Cacuk Sudarijanto said in response to queries from reporters before a meeting with Abdurrahman, who is also known as Gus Dur.

"The reason for his resignation is because (his presence) is no longer effective. His duty was originally to help me in this field."

Hasyim Wahid, known as Gus Im, joined IBRA in December as an "expert adviser" to help the agency force recalcitrant debtors to repay their debts or enter serious negotiations on debt restructuring.

His position, which was only recently confirmed to the media, fanned accusations of nepotism.

There also were fears Gus Im would use his position to raise funds from indebted conglomerates for the President's political interests.

The President denied the allegations last week, asserting that he had no plans to ask his brother to resign from the agency because he was "clean and honest".

IBRA controls some Rp 600 trillion worth of assets, including more than Rp 200 trillion worth of nonperforming loans taken over from nationalized, closed down and recapitalized domestic banks.

Gus Im was assigned to a special division at IBRA called the asset forensic division, with duties including the tracing of the assets of bad debtors which might have been concealed or sold overseas.

He liked to describe his role as an arm-twister for bad debtors.

The agency has faced difficulties in collecting loans from bad debtors and having debtors enter debt-restructuring talks in good faith.

In a new letter of intent signed with the International Monetary Fund last week, the government pledged that IBRA would reach several major restructuring deals this year with the top 21 obligors. They account for 36 percent of the total debts under the agency's management.

Many analysts have said that IBRA is vulnerable to abuse or political intervention due to the huge amount of assets under its control.

The plans to impose a new law which would allow IBRA to directly report to the President have further increased the concern of political intervention.

Economist Sri Mulyani said that although the new structure might help IBRA to accelerate its asset disposal program, the move could make the agency vulnerable to abuse by the President himself.

"But the problem is that the President has been very dominating in the decision-making process here ... Past experiences have showed that intervention often came from the President."

Sri explained that intervention by the President would undermine the professional judgment of IBRA.

"The President (Gus Dur) has no technical competence and authority."

She said the debt-restructuring decision of giant petrochemical firm PT Chandra Asri made by the President recently was an example of such political intervention which caused a negative image for IBRA and Indonesia.

"I can't understand why a president who doesn't understand economics was given the authority to make a technical decision on such matters as the Chandra Asri case," said Sri, who is also the secretary-general of the National Economic Council, which advises the President on economic issues.

The President reached an agreement with Japan's Marubeni company last week to restructure Chandra Asri's debt through a debt to equity swap mechanism. Under the deal, the government ended up owning 80 percent of the company, while Marubeni, which is the company's major foreign creditor, held 20 percent. (rei/cst)