House may block planned sale of Permata stake

House may block planned sale of Permata stake

The Jakarta Post, Jakarta

The House of Representatives may block the planned sale of the
government's majority stake in Bank Permata unless the Indonesian
Bank Restructuring Agency clears the way of all potential
stumbling blocks, including the resolution of a long-running
legal saga involving the bank.

Hakam Najam, a senior legislator on the House's finance
commission, said on Saturday that it was essential that these
matters be settled to avoid possible repercussions in the future.

"For Permata, we want everything to be clear first. We don't
anything fishy or opaque to be hanging over the bank. Like the
cessie case, for example, which is still a problem," Hakam said
on the sidelines of a seminar.

The case Hakam was referring to revolved around a protracted
legal confrontation between the agency and the Attorney's General
Office (AGO).

Permata was formed as the country's 10th largest bank two
years ago from a merger of five ailing banks being administered
by IBRA -- Bank Bali, Bank Universal, Bank Arthamedia, Bank Prima
Express and Bank Patriot. The agency, which took over several
troubled banks in the wake of the late 1990s financial crisis,
used public funds to finance the merger process.

It later turned out that the merger process funds totaling Rp
456.5 billion had been employed which were, in fact, not to be
touched as they were the subject of legal proceedings involving
the managing director of PT Era Giat Prima (EGP), Djoko Tjandra,
in a case popularly referred to as the Bank Bali scandal.

The scandal, which came to light in 1999, centered on
allegations that Djoko and a number of other influential people
obtained the money from Bank Bali based on an illegal
transaction, and that losses had been caused to the state as a
result.

However, the Supreme Court recently acquitted Djoko off all
charges, which means that IBRA has to return all the money to
EGP.

Failing to quickly resolve the case, Hakam added, would make
it difficult for the House to approve the plan.

Under the law, IBRA has to secure the approval of the House
for any divestment plans it might have for the banks under its
supervision.

"So, approval will be forthcoming as long as all the
requirements have been met. If not, then we will not force it,"
he said.

IBRA, which holds a 91.3 percent stake in the bank, has said
that it wanted to sell a stake of up to 71 percent in the bank
later this month. It also said it hoped the deal would be
concluded before it is wound up on Feb. 27.

It plans to seek this approval during the House's next
session.

Selling Permata, along with the ongoing Bank Lippo auction, is
the last remaining task facing the agency, having already sold in
the past two years majority stakes in Bank Central Asia (BCA),
Bank Niaga, Bank Danamon and Bank Internasional Indonesia (BII).

Umar Juoro, an economist at the Center for Information and
Development Studies (CIDES), also urged IBRA not to rush in
selling the bank when all the necessary preparations had not been
completed.

Even if the sale is not carried out by IBRA, Umar added, its
successor institution could complete it.

The government is planning to set up a state agency under the
auspices of the Office of State Minister of State Enterprises to
replace IBRA in managing unsold assets.