House grills IBRA over Guthrie deal

House grills IBRA over Guthrie deal

JAKARTA (JP): The House of Representatives commission IX on
state budget and finance questioned the Indonesian Bank
Restructuring Agency (IBRA) on Tuesday regarding its recent
US$350 million deal with Malaysia's Kumpulan Guthrie Bhd.

Legislators said that the sale of hundreds of thousands of
hectares of oil palm plantations to the Malaysian company could
create political and security problems in Sumatra and other
provinces.

"Why did IBRA proceed with the transaction when there's a
problem," said legislator Rizal Djalil during a hearing involving
the commission and the agency.

"The implications of IBRA's decision is huge ... It could
create instability in Riau and other areas. You should have been
sensitive to this kind of thing," he added.

In November last year IBRA sold 24 oil palm plantation firms
previously owned by the Salim Group to Kumpulan Guthrie for
approximately US$350 million. The sale was conducted following a
competitive bidding process.

The Malaysian firm deposited the money in an escrow account.

The plantation firms, covering some 260,000 hectares, are
located in the provinces of Sumatra, Kalimantan and Sulawesi.

Some local farmers and legislators have protested the deal,
demanding that the government cancel the transaction amid claims
that part of the plantation land belongs to the local people.

IBRA Chairman Edwin Gerungan declined to respond, arguing that
the problem was no longer within the agency's authority.

"At the current stage of developments the decision is in the
hands of the finance minister or coordinating minister for the
economy. It is no longer in IBRA's hands," Edwin said.

Finance Minister Prijadi Praptosuhardjo has also flatly
rejected the demand for an annulment of the deal with the
Malaysian state plantation company.

The House commission IX decided to form a joint team with the
House commission III to help sort out problems with IBRA's deal
with Kumpulan Guthrie.

The oil palm plantation firms were part of the assets
comprising some 100 companies surrendered by the Salim Group to
repay its debt to the government. IBRA must dispose of the assets
to raise funds to help finance the state budget deficit.

Several IBRA officials have said that canceling the
transaction with Kumpulan Guthrie could further erode
international investor confidence in the ailing economy.

They said such a move would also destroy the credibility of
IBRA when selling other assets in the future.

IBRA, which manages about Rp 600 trillion in assets and debts
seized from closed, nationalized and recapitalized banks, has
targeted Rp 27 trillion to be raised in cash this year to help
finance the state budget.

Malaysia's International Trade and Industry Minister Rafidah
Aziz is scheduled to visit Jakarta in March to discuss a number
of issues, including the problems faced by Malaysian plantation
companies in Indonesia.

It is reported that Rafidah hopes the government of Indonesia
will stand firm on the sale of the Salim Group plantations to
Guthrie.

Meanwhile, legislator Paskah Suzetta suspected that there had
been political intervention in the transaction process.

"I'm sure that this is not a mistake on the part of IBRA.
There must have been political intervention from the top," Paskah
said, pointing out that the agency had to seek approval from the
powerful ministerial Financial Sector Policy Committee (FSPC)
when conducting transactions valued over Rp 1 trillion.

"I want this kind of intervention eliminated ... There's no
need for IBRA to be accountable to the FSPC, because IBRA needs
only report to the finance minister," he added.

FSPC, chaired by the chief economic minister, groups several
economic ministers to oversee the country's major bank and
corporate restructuring program. The committee was formed last
year following the high profile Bank Bali scandal which involved
a senior IBRA official.

Other legislators also suspected that the FSPC had been
intervening in IBRA's affairs.

Reports have earlier indicated that the recent decision by two
IBRA deputy chairmen to resign was prompted by the strong
intervention of senior economic ministers in the agency's
affairs.

IBRA deputy chairman for bank restructuring Jerry Ng
reaffirmed on Tuesday his decision to leave the agency and return
to the private sector.

Jerry, however, said that he resigned from the agency because
most of his bank restructuring programs had been completed.

But IBRA deputy chairman for asset management investment
Mahmuddin Yasin said that Finance Minister Prijadi Praptosuhardjo
had asked him to stay at the agency.

Mahmuddin is a senior official from the finance ministry.

"As government employees, we have a code of conduct. If the
minister asks me to continue, I have to follow his orders," he
said. (rei)